Why Companies Go Private in Emerging Markets? Evidence from Poland
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.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- David J. Denis, 1992. "Corporate Investment Decisions and Corporate Control: Evidence From Going-Private Transactions," Financial Management, Financial Management Association, vol. 21(3), Fall.
- 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.
- Servaes, Henri, 1994. "Do Takeover Targets Overinvest?," Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 253-77.
- 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.
- 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.
- Gilson, Stuart C., 1989. "Management turnover and financial distress," Journal of Financial Economics, Elsevier, vol. 25(2), pages 241-262, December.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpfi:0511013. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.