Prague Economic Papers 2011, 20(4):348-365 | DOI: 10.18267/j.pep.404

Determinants of Firm Delisting on the Prague Stock Exchange

Zuzana Fungáčová1, Jan Hanousek2
1 Bank of Finland Institute for Economies in Transition (BOFIT), Snellmaninaukio, PO Box 160, FI-00101 Helsinki, Finland (zuzana.fungacova@bof.fi).
2 Charles University, CERGE-EI, Prague, Politických vězňů 7, 111 21 Prague 1, Czech Republic; Anglo-American University, Prague; CEPR; WDI. (jan.hanousek@cerge-ei.cz).

This research investigates the emergence of stock market in the Czech Republic. We use Czech mass privatization as an experiment that allows us to analyze under what conditions a viable stock market arises. On the Prague Stock Exchange (PSE), unlike its counterparts in Poland or Hungary, exceptionally large amounts of shares were delisted e.g. excluded from public trading soon after trading at this market began in 1993. We estimate the determinants of shares delisting analyzing the period 1993-2004. Using firm-level data on listed and delisted companies we show that it was possible to prevent massive delisting if certain pre-privatization and privatization characteristics of the companies had been taken into account when deciding which companies to place on the stock exchange for public trading following the mass privatization. This result has important implications for establishing stock markets in emerging economies.

Klíčová slova: privatization, transition economy, stock market, delisting
JEL classification: G15, G28, P34

Zveřejněno: 1. leden 2011  Zobrazit citaci

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Fungáčová, Z., & Hanousek, J. (2011). Determinants of Firm Delisting on the Prague Stock Exchange. Prague Economic Papers, 20(4), 348-365. doi: 10.18267/j.pep.404
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