Going Public: Key Factors to Consider by IPO Candidates on Emerging Markets of Poland and the Czech Republic

Abstract

Increasing globalization contributes to the growing role primary capital markets play for raising external equity capital. This phenomenon is becoming more significant in both developed and emerging countries and influences the effectiveness of national economy. We survey 45 chief financial officers (CFOs) from not public and not financial companies operating in the Czech Republic and Poland to document the internal determinants of going public. We use statistical analyses and comparison with recent academic literature and empirical evidence to interpret the survey-gained data. First, the most important IPO motivations are enhanced publicity and reputation of the company and establishment of the firm´s market value. These benefits are expressed by CFOs across all firms and in both countries. A considerably larger number of CFOs is motivated by raising external equity capital. Surveyed companies tend to conduct an IPO in the expansion stage of their life cycle. Next, the significance of other going public determinants differs between Czech and Polish respondents and across companies varying in size and age. Third, our findings indicate that theories on IPO formulated for welldeveloped capital markets can explain going public determinants in smaller emerging markets. We suggest that our evidence can be a source of knowledge for enterprises while formulating new financial strategies. Furthermore, we also expect that survey results will be beneficial for investment bankers, stock exchanges and macroeconomic policy makers while discussing and designing incentives to attract more enterprises onto the primary capital markets under the specific conditions of the Czech Republic and Poland.

Modelling of Social Key Performance Indicators of Corporate Sustainability Performance

“…The next step included a survey aimed to verify the relevance of the hypothesis. The questionnaire was developed based on previous empirical research (Meluzín et al, 2013;Meluzín et al, 2016) and used a rating method. Respondents (managers of selected companies) assessed the importance of individual indicators on a scale of < 0;10 >.…”

Why Do Companies Go Public? Evidence from the Prague Stock Exchange

“…The financial market has been dominated by banks and the Prague Stock Exchange (PSE) has failed to fulfil one of the primary tasks the stock markets traditionally play, i.e. it fails to function as a place where companies would launch primary issues to raise equity (Meluzín, Zinecker, & Lace, 2016;Balcerzak, Kliestik, Streimikiene, & Smrčka, 2017).…”

“…The phenomena of information asymmetry, information disclosure, losing control over the company or IPO failure risk have received fairly substantial support in the academic studies (Myers, 1984;Myers & Majluf, 1984;Chemmanur & Fulghiery, 1999;Fontinelle, 2015;Isniawati, Rahmawati, & Gunardi, 2018). In a survey based study, Meluzín, Zinecker and Lace (2016) deliver evidence that the most important IPO motivations among Czech companies include enhanced publicity and reputation and establishment of the firm´s market value. Surprisingly, Czech companies do not feel motivated by raising external equity capital.…”

“…Based on the literature dealing with the factors influencing the IPO implementation (e.g. Röell, 1996;Rydqvist & Högholm, 1995) and the results of the previous empirical studies in the context of the Czech Republic (Meluzín, Zinecker, & Lace, 2016), we defined a set of variables serving as a tool for identifying the reasons for the IPO launch using a sample of the examined companies. The results are subject to comparison with the officially declared prospectuses of individual issuers.…”

Decision Making on Capital Markets Using Non-Numerical Model Based on Qualitative Trends

“…Where there is no adequate statistical data or shortness of implying any mathematical function for sharp variables on IPO timing, is in this paper given solution by developing a qualitative model supporting chief financial officers (CFOs) when considering going public under conditions of emerging and underdeveloped capital markets. Recent academic theories as well as empirical research documented a wide range of factors that affect decision making on IPO timing in well-developed capital markets, Meluzín, Zinecker (2014), Meluzín et al (2016).…”