Impact of macroeconomic variables on the number of first public offers on the example of the Warsaw Stock Exchange
DOI:
https://doi.org/10.26485/SPE/2021/119/16Keywords:
IPO, GDP growth rate, interest rate, return on the stock exchange index, WSEAbstract
Background: The impact of macroeconomic variables on the number of initial public offerings (IPOs) was analysed. Individual general economic indicators affect the stock market in different ways. The results of research taking into account their impact on the number of IPOs carried out in different countries are also varied. Therefore, it was decided to conduct an analysis in this respect, focusing on the Warsaw Stock Exchange (WSE), indirectly trying to check whether the results of foreign research are reflected in the situation of the Polish market.
Research purpose: The main motive for undertaking the research was to verify the impact of selected macroeconomic indicators on the number of IPOs. This goal was followed by the following research hypotheses: the GDP growth rate positively influences the number of IPOs, the interest rate negatively affects this variable, and the increase in the rates of return on the Warsaw Stock Exchange Index (WIG) contributes to the increase in the number of IPOs.
Methods: Empirical verification of macroeconomic variables’ impact on the number of IPOs was carried out using linear regression models. For the annual models, the estimation was carried out using the Least Squares (OLS) method, and in the case of quarterly models – also using the Generalized Least Squares (GLS) method in order to avoid heteroscedasticity of the residuals. The number of IPOs in 2005–2019 was analysed and explained with indicators delayed by 1 period.
Conclusions: The rate of return on WIG had a significant positive impact on the number of IPOs in the next period, both under annual and quarterly models. In the case of other variables, their significant impact on the number of IPOs was observed only in the case of quarterly ones. The GDP growth rate showed a positive correlation with the number of IPOs, which is in line with the previously formulated hypothesis, similarly to the rates of return from WIG. A positive impact on the number of IPOs was also noted in the case of the reference interest rate – this result differed from the expected one. Apart from the results of the study, one can also point to the purposefulness of using models prepared on the basis of both annual and quarterly data, in the case of examining the impact of macroeconomic variables on the number of IPOs.
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