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Why Companies Go Private in Emerging Markets? Evidence from Poland


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  • Oskar Kowalewski

    (Leon Kozminski Academy of Entrepreneurship & Managment)

  • Krzysztof Jackowicz

    (Leon Kozminski Academy of Entrepreneurship & Managment)


In recent years the number of going private transactions has sharply increased in emerging markets. The purpose of this study is to establish the financial characteristics of companies that have gone private using a dataset comprising of Polish companies. We use a probit model to distinguish the difference between firms that went private and companies that did not. We find that the probability of going private grew with a rise in the concentration of foreign ownership, an increase in the relative level of free cash flows, a decrease in the level of long term debt, and a decrease in the liquidity of share trading. The results obtained are important both for investors wishing to identify entities characterized by a high likelihood of going private and for governmental authorities evaluating the methods and rationality of privatization mature state- owned enterprises.

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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 0511013.

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Length: 30 pages
Date of creation: 25 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpfi:0511013

Note: Type of Document - pdf; pages: 30
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Related research

Keywords: Going Private; free cash flow; information asymmetry; ownership structure; emerging markets;

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  1. Servaes, Henri, 1994. "Do Takeover Targets Overinvest?," Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 253-77.
  2. David J. Denis, 1992. "Corporate Investment Decisions and Corporate Control: Evidence From Going-Private Transactions," Financial Management, Financial Management Association, vol. 21(3), Fall.
  3. Robert L. Kieschnick, Jr, 1998. "Free Cash Flow and Stockholder Gains in Going Private Transactions Revisited," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(1&2), pages 187-202.
  4. Halpern, Paul & Kieschnick, Robert & Rotenberg, Wendy, 1999. "On the Heterogeneity of Leveraged Going Private Transactions," Review of Financial Studies, Society for Financial Studies, vol. 12(2), pages 281-309.
  5. Gilson, Stuart C., 1989. "Management turnover and financial distress," Journal of Financial Economics, Elsevier, vol. 25(2), pages 241-262, December.
  6. Elitzur, Ramy & Halpern, Paul & Kieschnick, Robert & Rotenberg, Wendy, 1998. "Managerial incentives and the structure of management buyouts," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 347-367, August.
  7. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
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Cited by:
  1. Pop, Diana & Pop, Adrian & Chemla, Gilles, 2010. "Privatization and governance regulation in frontier emerging markets: The case of Romania," Economics Papers from University Paris Dauphine 123456789/7707, Paris Dauphine University.


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