Blame No One? Investment Decisions of the Polish Stock-listed Companies

Tyrowicz, Joanna (2007): Blame No One? Investment Decisions of the Polish Stock-listed Companies. Unpublished.

Abstract

It is often raised that enterprises in transition countries are cursed with credit constraints and insufficient capital. Regardless of whether this belief holds for the whole of the economy, the Agency Theory provides a useful both theoretical and empirical framework helping to verify the efficiency of investment decisions in case of companies for which 'objective' future cash-flow valuation is available. The assertion of managerial discretion has been verified empirically for many different countries with the analytical background provided by user cost of capital and Tobin's Q theories. This paper’s contribution is the analysis of the Polish stock-listed companies behavior with the particular attention devoted to the corporate governance issues. We find that on average these companies overinvest relative to their opportunities, while this phenomenon is more severe in the case of even partial state ownership.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial constraints, investments decisions, system GMM, Poland, stock-exchange, managerial discretion
• Subjects: Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q31 - Demand and Supply; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment (including Inventories); Capacity; C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C23 - Models with Panel Data

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