Stock returns and liquidity after listing switch on the Warsaw Stock Exchange

Podedworna-Tarnowska, Dorota; Kaszyński, Daniel

doi:10.18559/ebr.2022.4.6

Cited by 2 publications

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“…Such results were confirmed in a broader sample, i.e. 71 companies by Podedworna-Tarnowska and Kaszyński (2022), who showed also the liquidity improvement of shares after the listing switch. Wawryszuk-Misztal (2016) found that for companies migrating from NewConnect to the WSE’s regulated market, there is no significant increase in the shareholding of financial institutions.…”

Section: Literature Reviewsupporting

confidence: 54%

“…, 2021). Studies include the effects of switching from a less regulated to a more regulated market (for example Sanger & McConnell, 1986; Jain & Kim, 2006; Asyngier, 2015; Kwok, 2020; Podedworna-Tarnowska & Kaszyński, 2022) or from more regulated to less regulated markets (e.g. Mortazian, 2022; Bessler et al.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, some works are based on data from other markets (Bacmann, Dubois, & Ertur, 2002;De Carvalho & Pennacchi, 2012;Park et al, 2016, Ahmed, Aney, & Banerji, 2019Kwok, 2020;Bessler et al, 2021). Studies include the effects of switching from a less regulated to a more regulated market (for example Sanger & McConnell, 1986;Jain & Kim, 2006;Asyngier, 2015;Kwok, 2020;Podedworna-Tarnowska & Kaszy nski, 2022) or from more regulated to less regulated markets (e.g. Mortazian, 2022;Bessler et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

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Listing switch and financial performance of companies: evidence from the Warsaw Stock Exchange

Podedworna-Tarnowska

2023

CEMJ

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PurposeThe purpose of this article is to present the results of empirical research concerning the identification of the impact of the transfer of companies from the alternative market to the regulated market of the Warsaw Stock Exchange on their operating and net performance.Design/methodology/approachThe study was conducted based on the empirical data of the companies that changed the listing place on the Warsaw Stock Exchange. Data regarding the years before the transfer were collected from the prospectuses of companies prepared mandatorily in connection with the transition to the regulated market. Data regarding the years of the event and subsequent years were obtained from companies' annual reports. As in other studies in the analysis, the operational metrics were used (operating return on sale, operating return on assets, total asset turnover), which was further extended to net profitability ratios (net return on ale, net return on asset, net return on equity). The significance analysis was based on the Student's t-test and Wilcoxon’s test.FindingsThe results show that before the transfer from the alternative market to the regulated market, companies improved financial performance. As a result of the change of listing venues, the results already collapsed in the year of the event. The downward trend continued in the following two years, with a noticeable improvement in the third year after the transfer.Originality/valueThe literature lacks such studies based on the Polish market. To the best knowledge of the author, this is one of the first studies in Poland showing the changes in operating and net performance of companies changing the stock listing venues. The research is based on a large group including all companies that have changed listing venues since the beginning of the alternative market in Poland. The article presents an original empirical result that can be used both by managers and investors in their decisions.

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Section: Literature Reviewsupporting

confidence: 54%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Listing switch and financial performance of companies: evidence from the Warsaw Stock Exchange

Podedworna-Tarnowska

2023

CEMJ

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“…Amihud and Mendelson (1986), Sanger and McConnell (1986), Baker and Edelman (1992), Kadlec and McConnell (1994), Jain and Kim (2006) confirmed that trading liquidity improves when shares start to be traded on an organized exchange. It was confirmed on the Polish market, as a result of the transfer of companies and the analyzed events preceding the transfer, there is an improvement in the liquidity of the shares (Podedworna-Tarnowska & Kaszyński, 2022).…”

Section: Theoretical Foundation and Hypotheses Developmentmentioning

confidence: 74%

“…Several studies concerning switching companies from a lower trading venue to a more regulated market show that such movement was followed by negative returns in the medium and long term (Sanger & McConnell, 1986;Baker & Edelman 1992;Kadlec & McConnell, 1994;Jain & Kim, 2006;Campbell & Tabner 2011;Vismara et al, 2012, Mortazian, 2022. As mentioned in the introduction, studies of companies' transfers on the Polish market are extremely rare but also confirmed the occurrence of abnormal positive stock returns before the change of listing market and clearly negative ones after the transfer of listing to the regulated market (Asyngier, 2015;Podedworna-Tarnowska & Kaszyński, 2022). Merton (1987) argues that if investors do not have equal information, they invest only in those securities of which they are aware, stocks that have a wide investor base and higher institutional ownership have lower expected returns.…”

Section: Theoretical Foundation and Hypotheses Developmentmentioning

confidence: 98%

Listing Switch on the Warsaw Stock Exchange: Raising Capital and Financial Leverage

Podedworna-Tarnowska

2023

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Theoretical background: Much attention has been paid in the finance literature to the issue of raising capital through the capital market. However, there is still not much focus on the analysis of this issue in the context of the transition of companies from the lower to the higher end of the stock market, e.g. the switch from the alternative market to the regulated market. In the Polish literature, the analysis of the going public in two stages is relatively unexplored. Purpose of the article: The purpose of the study is the identification of the impact of switching listing venue from an alternative market to the regulated one on the possibility of raising capital and the financial leverage. The research presents the results of the analysis of raising capital by the companies firstly entering the NewConnect and then transferring to the main market of the Warsaw Stock Exchange. Research methods: The analyses used the following metrics: debt-to-asset ratio and debt-to-equity ratio calculated over a longer time horizon covering the observation window beginning 3 years before the transfer and ending 3 years after the transfer (in total, 7 years). To examine if the ratios differ significantly between before and after the change, the significance analysis was based on the parametric tests: t-student’s paired test for means and the Wilcoxon matched-pairs signed-rank test for medians. Main findings: Listing switch on the Warsaw Stock Exchange and entering a regulated market has triggered the growth of companies but did not lead in equity being raised by companies during the debut on the regulated market. Companies did not reduce financial leverage, debt-to-asset-ratios and debt-to-equity ratios increased in the years following the change of listing venue from the alternative market to the regulated market.

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Stock returns and liquidity after listing switch on the Warsaw Stock Exchange

Cited by 2 publications

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Listing switch and financial performance of companies: evidence from the Warsaw Stock Exchange

Listing switch and financial performance of companies: evidence from the Warsaw Stock Exchange

Listing Switch on the Warsaw Stock Exchange: Raising Capital and Financial Leverage

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