Establishing Reputation on the Warsaw Stock Exchange
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Date
1999-08
Authors
Standifird, Stephen Scott
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon
Abstract
During 1989, East Central Europe witnessed one of the most remarkable
transformations in socio-political history. The economic transformation that followed
represents one the most remarkable economic transitions in modern history. In Poland,
the Warsaw Stock Exchange has greatly facilitated the transition from a centrally
controlled to a market-based economy. Still, the general youthfulness of the Warsaw
Stock Exchange erodes the ability of individual firms traded on the exchange to establish
a positive reputation with investors. This dissertation investigates how firms traded on the
Warsaw Stock Exchange establish reputation with investors despite the youthfulness of
the exchange. To address this topic, a general model of organizational reputation formation is
developed. The model presented suggests that the individual firm can establish itself as
reputable through the mechanisms of performance, signaling and legitimation. The
general model is used to develop specific hypotheses concerning how firms traded on the
Warsaw Stock Exchange establish reputation with investors. Two separate analyses are
conducted to test the hypotheses. The first analysis looks at all firms traded on the Warsaw Stock Exchange as of the end of 1996 while the second analysis looks
specifically at the reputation of firms immediately following the issuing of new shares.
The results provide mixed support for the hypotheses. However, the results
suggest an important role for financial performance, ownership structure and the use of
international brokers during the issuing of new shares, each relating to the mechanisms of
performance, signaling and legitimation, respectively. Thus, each of the mechanisms
identified in the general model of organizational reputation formation appears to have
some influence in shaping the reputation of the firm.
Description
136 pages
Keywords
The Polish Capital Market, Organizational legitimacy, The process of legitimation, Business strategy, International management