Targeting IPOs from the Central European emerging stock markets (CEESM) of Poland during the global financial crisis

Abstract

PurposeThe purpose of this paper is to focus on Initial Public Offering (IPO) investments, performance and activity in times of the global financial crisis.Design/methodology/approachThe paper utilizes, in a pioneering attempt, a modified regression model that is widely used in medical research (i.e. measuring the effectiveness of painkillers, aspects of breastfeeding, cancer research) but proved efficient and informative for the studied area. Embarking on Cox's Hazard Model perfectly mirrored investors' approach to IPO investments. Henceforth, the empirical findings reported in the paper became practical for IPO investors. The quantitative findings are then discussed with high‐profile practitioners, in order to inject more realism into the study. The qualitative research framework expands the empirical analysis to cover significant issues related to IPO activities and proves invaluable in the process of constructing practical implications.FindingsSince the main purpose of the paper is to test the profitability of targeting IPOs from the Polish stock market, the main research question attempted in the paper refers to finding out whether IPO investments constitute an attractive alternative for direct equity investments, especially during the global financial turmoil. On this occasion, the current paper advises on trading strategies that involve targeting IPOs and shield investors from experiencing crisis‐induced losses. These findings remain topical as they contribute to the current debate on tailoring investment approaches to the global financial crises. Furthermore, focusing on the issues related to the overblown deficit reported by the transition economy delivers novel and important implications for policymakers striving to stabilize budget in the aftermath of the nascent financial crisis.Originality/valueWhat distinguishes the paper from previous studies is the original methodology, three‐dimensional approach to IPO activities (adopting a company's, investor's and policymaker's perspectives) and focusing on the systemically important European market that somehow was overlooked by previous studies in this area but recently vaulted into prominence among international investors who regard the Polish stock market as a regional leading bourse.