Going Public: Key Factors to Consider by IPO Candidates on Emerging Markets of Poland and the Czech Republic

Increasing globalization contributes to the growing role primary capital markets play for raising external equity capital. This phenomenon is becoming more significant in both developed and emerging countries and influences the effectiveness of national economy. We survey 45 chief financial officers (CFOs) from not public and not financial companies operating in the Czech Republic and Poland to document the internal determinants of going public. We use statistical analyses and comparison with recent academic literature and empirical evidence to interpret the survey-gained data. First, the most important IPO motivations are enhanced publicity and reputation of the company and establishment of the firm´s market value. These benefits are expressed by CFOs across all firms and in both countries. A considerably larger number of CFOs is motivated by raising external equity capital. Surveyed companies tend to conduct an IPO in the expansion stage of their life cycle. Next, the significance of other going public determinants differs between Czech and Polish respondents and across companies varying in size and age. Third, our findings indicate that theories on IPO formulated for well-developed capital markets can explain going public determinants in smaller emerging markets. We suggest that our evidence can be a source of knowledge for enterprises while formulating new financial strategies. Furthermore, we also expect that survey results will be beneficial for investment bankers, stock exchanges and macroeconomic policy makers while discussing and designing incentives to attract more enterprises onto the primary capital markets under the specific conditions of the Czech Republic and Poland.