Ownership Characteristics and Access to Finance:Evidence from a Survey of Large Privatised Companiesin Hungary and Poland.

We examine financial constraints and forms of finance used for investment, byanalysing survey data on 157 large privatised companies in Hungary and Poland for theperiod 1998 – 2000. The Bayesian analysis using Gibbs sampling is carried out toobtain inferences about the sample companies’ access to finance from a model forcategorical outcome. By applying alternative measures of financial constraints we findthat foreign companies, companies that are part of domestic industrial groups andenterprises with concentrated ownership are all less constrained in their access tofinance. Moreover, we identify alternative modes of finance since different corporatecontrol and past performance characteristics influence the sample firms’ choice offinance source. In particular, while being industry-specific, the access to domestic creditis positively associated with company size and past profitability. Industrial groupmembers tend to favour bond issues as well as sells-offs of assets as appropriate typesof finance for their investment programmes. Preferences for raising finance in the formof equity are associated with share concentration in a non-monotonic way, being mostprevalent in those companies where the dominant owner holds 25-49% of shares. Closelinks with a leading bank not only increase the possibility of bond issues but also appearto facilitate access to non-banking sources of funds, in particular, to finance supplied byindustrial partners. Finally, reliance on state finance is less likely for the companieswhose profiles resemble the case of unconstrained finance, namely, for companies withforeign partners, companies that are part of domestic industrial groups and companieswith a strategic investor. Model implications also include that the use of state funds isless likely for Polish than for Hungarian companies.....