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Issuing Bonds, Shares or Staying Private? Determinants of Going Public in an Emerging Economy

Listed author(s):
  • Jackowicz, Krzystof

    (Kozminski University)

  • Kowalewski, Oskar

    (Institute of Economics, Polish Academy of Sciences and World Economy Research Institute, Warsaw School of Economics)

  • Kozlowski, Lukasz

    (Kozminski University and Bank BGZ BNP Paribas SA)

  • Roszkowska, Paulina

    (Institute of Value Management, Warsaw School of Economics)

The Warsaw Stock Exchange is one of Europe's largest exchanges by the number of IPOs, although it retains features of a market in post-transition countries, including a relatively small size, shallowness and a weak institutional framework. In this study, we use a large dataset to explore firms' decisions to issue equity on the main or alternative market and debt on the bond market. We observe that in general, larger, more profitable firms are more likely to go public, although in contrast to developed economies, these firms tend to be younger. Moreover, we find that current market valuation positively affects the decision to go public on the main market, and we establish that highly leveraged companies are more likely to issue either shares on the alternative market or bonds. At the same time, however, we observe that firms issuing shares on the alternative market are most likely to manipulate their profitability prior to going public.

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File URL: http://fic.wharton.upenn.edu/fic/papers/14/p1415.html
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Paper provided by University of Pennsylvania, Wharton School, Weiss Center in its series Working Papers with number 14-15.

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Date of creation: Sep 2014
Handle: RePEc:ecl:upafin:14-15
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  1. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  2. Denis, David J. & Mihov, Vassil T., 2003. "The choice among bank debt, non-bank private debt, and public debt: evidence from new corporate borrowings," Journal of Financial Economics, Elsevier, vol. 70(1), pages 3-28, October.
  3. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
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  5. Allen, Franklin & Jackowicz, Krzysztof & Kowalewski, Oskar, 2013. "The effects of foreign and government ownership on bank lending behavior during a crisis in Central and Eastern Europe," MPRA Paper 48059, University Library of Munich, Germany.
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  11. Kim, Woojin & Weisbach, Michael S., 2008. "Motivations for public equity offers: An international perspective," Journal of Financial Economics, Elsevier, vol. 87(2), pages 281-307, February.
  12. Belén Gill de Albornoz & Peter F. Pope, 2004. "The Determinants Of The Going Public Decision: Evidence From The U.K," Working Papers. Serie AD 2004-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  13. Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
  14. Shirasu, Yoko & Xu, Peng, 2007. "The choice of financing with public debt versus private debt: New evidence from Japan after critical binding regulations were removed," Japan and the World Economy, Elsevier, vol. 19(4), pages 393-424, December.
  15. Marco Pagano & Ailsa Röell, 1998. "The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 187-225.
  16. William P. Rees, 1997. "The Arrival Rate of Initial Public Offers in the UK," European Financial Management, European Financial Management Association, vol. 3(1), pages 45-62.
  17. Rajan, Raghuram & Servaes, Henri, 1997. " Analyst Following of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 52(2), pages 507-529, June.
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