Why do companies go private in emerging markets? : evidence from Poland

In recent years the number of going private transactions has considerably increased in emerging markets. The purpose of this study is to define the financial characteristics of companies that have gone private using a dataset comprising Polish companies. By applying a probit model we were able to distinguish the difference between firms that went private and those that did not. We found that the probability of going private grew with an increase in the concentration of foreign ownership, a rise in the relative level of free cash flows, a decrease in the level of long term debt, and a decrease in the liquidity of share trading. The results obtained are important both for investors wishing to identify entities marked by a high likelihood of going private as well as for governmental authorities evaluating the methods and rationality of privatization among mature state-owned enterprises.