The Effect of Share Capital on Company Performance
30 Pages Posted: 25 Nov 2019
Date Written: November 13, 2019
This article examines the impact of share capital on companies’ performance as well as the effect of accounting information on companies’ market performance and the impact of pre-IPO information on the predictive power of companies' performance after an initial public offering (IPO). The research was conducted on a sample of IPO companies debuting on the Warsaw Stock Exchange in the period 1998–2013. It shows that a large percentage of share capital in equity reduces capital flexibility but can also be a signal to improve companies' market performance. It also shows that after an IPO, the market's information efficiency diminishes, which means, among other things, that pre-IPO accounting information has a negligible impact on the companies’ market performance after the IPO.
Keywords: capital structure, share capital, signalling, face value, capital flexibility, information efficiency, company performance, IPO, WSE
JEL Classification: G14, G32, K22, M41, O16
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