Ownership structure and investment finance in transition economies: a survey of evidence from large firms in Hungary and Poland

Filatotchev, Igor, Isachenkova, Natalia and Mickiewicz, Tomasz (2007) Ownership structure and investment finance in transition economies: a survey of evidence from large firms in Hungary and Poland. Economics of Transition, 15(3), pp. 433-460. ISSN (print) 0967-0750

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Abstract

Using survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs' expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump-shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the `pecking order' theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks.

Item Type: Article
Additional Information: This work was supported by the European Commission (Phare ACE Programme P98-1048-R) and the MC Grabowski Fund.
Uncontrolled Keywords: corporate governance, enterprises, concentrated ownership
Research Area: Business and management studies
Faculty, School or Research Centre: Faculty of Business and Law
Faculty of Business and Law > Kingston Business School (Accounting and Finance) (until July 2013)
Depositing User: Katrina Clifford
Date Deposited: 15 Sep 2008
Last Modified: 16 May 2011 07:27
URI: http://eprints.kingston.ac.uk/id/eprint/2951

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