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

Igor Filototchev, Natalia Isachenkova, Tomasz Mickiewicz

Research output: Contribution to journalArticle

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.
Original languageEnglish
Pages (from-to)433-460
Number of pages28
JournalEconomics of Transition
Volume15
Issue number3
DOIs
Publication statusPublished - Jul 2007

Bibliographical note

© 2007 The Authors Journal compilation © 2007 The European Bank for Reconstruction and Development. Published by Blackwell Publishing Ltd
The definitive version is available at wileyonlinelibrary.com

Keywords

  • corporate governance
  • transition
  • concentrated ownership
  • enterprises
  • investment

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