Why Do Companies Go Public? Evidence from the Prague Stock Exchange
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Date
2019-03-19
Authors
Skalická, Martina
Zinecker, Marek
Balcerzak, Adam Przemyslaw
Meluzín, Tomáš
0000-0003-1764-0904Advisor
Referee
Mark
Journal Title
Journal ISSN
Volume Title
Publisher
Cracow University of Economics
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Abstract
Objective: In this article, we intend to contribute evidence in regard to going public motivation on a sample of companies that launched an IPO at the Prague Stock Exchange between 2004 and 2017. Research Design & Methods: In order to evaluate the prevailing motives for the IPO launch, we design and apply a set of composite indicators the values of which may be understood as an indication of the extent to which IPO launch motives originate in the zone of the issuing company's needs or in the zone of interest of its owner (owners). Findings: Our main conclusion is that the dominant going public motivation is to allow current shareholders to cash out and to enhance the company's publicity and image. Implications & Recommendations: Since the study disclosed that the prevailing motive of primary issues at the Prague Stock Exchange was the exit of investors and enhancing publicity and image we suggest that companies launching the Prague Stock Exchange in recent years were predominantly determined by non-financial aspects. Thus, the research findings represent substantial implications for issuers, investment bankers, the stock exchange, and macroeconomic policy makers when the concept of incentive schemes how to increase the attractiveness of the local capital market will be proposed. Contribution & Value Added: Our set of composite indicators allows to assess not only the predominant IPO motive zone, but also measure the intensity of the motives. This helps to understand better the urgency of the needs of the issuing companies satisfied by the IPO implementation.
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Citation
Entrepreneurial Business and Economics Review. 2019, vol. 7, issue 1, p. 181-199.
https://eber.uek.krakow.pl/index.php/eber/article/view/491
https://eber.uek.krakow.pl/index.php/eber/article/view/491
Document type
Peer-reviewed
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Published version
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en
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Creative Commons Attribution-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nd/4.0/
http://creativecommons.org/licenses/by-nd/4.0/