Ownership structure and investment finance in transition economies
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. Copyright (c) 2007 The AuthorsJournal compilation (c) 2007 The European Bank for Reconstruction and Development .
Year of publication: |
2007
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Authors: | Filatotchev, Igor ; Isachenkova, Natalia ; Mickiewicz, Tomasz |
Published in: |
The Economics of Transition. - European Bank for Reconstruction and Development (EBRD). - Vol. 15.2007, 07, p. 433-460
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Publisher: |
European Bank for Reconstruction and Development (EBRD) |
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