THE BENEFITS AND COSTS OF COMPANY’S PRESENCE ON THE PUBLIC CAPITAL MARKET IN POLAND
Journal Title: Экономика и финансы - Year 2014, Vol 1, Issue 5
Abstract
Along with the development of financial market in Poland there is a growing popularity of alternative ways of financing business activity of companies which include issuing and trading in financial instruments on the public stock exchange market. The aim of the present study is to outline major benefits and costs incurred by companies taking part in the public trading in securities. To verify the advantages and disadvantages one used secondary data of the WSE and literature research regarding the capital market. Many sources claim that the presence of a company on the stock market facilitates its development as a result of the capital flow, but also the prestige resulting from the status of a stock-listed company. Such companies have better financial perspectives as they have a greater credibility and more possibilities of making new business connections. A positive effect of the presence on the public market is also an internal motivation of its management board and workforce to work more effectively due to constant control of supervisory bodies, public opinion and investors. The presence of a company in public trading improves its chance to overtake other business entities and gain a strategic investor. The marketing effect, i.e. cost-free promotion of a company in mass media, and expansive development of a company may also be perceived as benefits. On the contrary, the presence on the capital market bears certain costs. Depending on the market and the size of issue and company structure, the barriers are highly varied. The risks resulting from public trading in financial instruments among others include: the costs of listing securities on the stock market and the presence on this market, the risk of hostile takeover, change of corporate culture, respecting the rights of minority shareholders as well as the need to disclose all information regarding financial condition of the company.
Authors and Affiliations
Marek Garbowski, Tomasz Kutryb
Keywords
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