Determinants of Voluntary Delisting in Post-Transition Markets: Evidence from Poland

Companies pursue stock exchange listings to enhance liquidity, expand financing opportunities and access strategic partners (Pagano, Panetta & Zingales, 1998; Asker, Farre-Mensa & Ljungqvist, 2015; Riyath & Dayaratne, 2025). Historically, IPO proceeds have predominantly funded tangible and financial investments, supported working capital and reduced debt (Łukasik, 1998). Beyond these financial motives, firms also use listing to improve their image, corporate governance and competitive position, with the relative weight of these objectives varying by jurisdiction, business-cycle phase and firm age at debut (Kim & Weisbach, 2008; Mayur & Kumar, 2013). IPO volumes are procyclical: economic expansion brings rising offerings and elevated prices, and following positive macroeconomic shocks the market typically absorbs a wave of less reputable, lower-profitability entrants (Çolak, Yung & Wang, 2008). Shifts in investor sentiment provide an additional explanation for fluctuations in IPO activity (Lowry, 2003). The motives that underlie the decision to list are subsequently re-evaluated during public-market operations; when those motives no longer hold, firms begin to consider withdrawal from public trading. Table 1 summarizes the most important studies on the determinants of stock exchange entry from a geographic and temporal perspective.

Withdrawal from public markets has become a global phenomenon (Martinez & Serve, 2017), with delistings now frequently outnumbering new offerings and creating a so-called ‘listing gap’ (Doidge et al., 2017). The literature identifies two broad categories of determinants: firm-level characteristics—financial condition, ownership structure, age and industry—and external conditions, including the macroeconomic environment, regulatory regime and the structure of the private capital market.

Among firm-level characteristics, age at IPO and listing duration have received considerable attention. Firms registered for longer periods prior to going public have stronger chances of remaining listed (Yang & Sheu, 2006), and the probability of withdrawal due to regulatory violations peaks approximately 4 years after the IPO, while transfers and Mergers and Acquisitions-related (M&A-related) delistings occur on average 2 years post-IPO (Pour & Lasfer, 2013). Longer-listed firms also accumulate longer financial histories, enabling more accurate valuation and reducing information asymmetry.

Financial condition is a further important predictor. Return on Equity (ROE) has been identified as a significant variable, with sustained profitability associated with lower delisting risk (Chou, Cheng & Chien, 2011; Sokołowska, 2012). Higher financial leverage, measured by debt-to-assets, is linked to greater uncertainty and shorter post-IPO survival (Demers & Joos, 2007), and the leverage–profitability nexus underscores the complementarity of financial determinants of voluntary withdrawal (Margaritis & Psillaki, 2010). Higher absolute share prices also correlate with lower delisting probability (Fernando et al., 2004). Evidence from the Johannesburg Stock Exchange reinforces these findings: Makuvaza et al. (2025) report that the frequency of financial distress events, the duration of loss-making periods and consecutive revenue declines raise delisting risk, with profitability metrics (Return on Assets - ROA), firm size and listing duration acting in concert with macroeconomic conditions.

Firm size and industry membership shape delisting incentives. Larger entities amortise fixed listing costs more efficiently, so smaller firms tend to delist first when those costs rise (DeAngelo, DeAngelo & Rice, 1984). Firms exiting public markets are typically small and operate in mature, slow-growth sectors (Tutino, Panetta & Laghi, 2013), and frequently relocate to less liquid market segments rather than going fully private (Bessler et al., 2019). Industry affiliation matters: delistings are more common outside the technology sector, with concentrations observed in textiles and apparel, construction and retail (Kang, 2017). Underwriter and auditor reputation are also associated with post-IPO survival (Carpentier & Suret, 2011).

Ownership concentration is among the structural determinants most directly relevant to voluntary delisting. Firms with a high concentration of the largest shareholding more frequently exit public markets (Kang, 2017), as dominant shareholders find it operationally and legally easier to cross the voting-rights threshold required to execute a squeeze-out—a threshold that varies by jurisdiction. Concentrated ownership is also a recognised source of agency conflict (Leuz, Triantis & Wang, 2008), and listing-maintenance costs interact with firm-specific profitability in shaping the cost–benefit calculus of the remaining public (Pour & Lasfer, 2013; Konno & Itoh, 2017). A multifactorial analysis of the Johannesburg Stock Exchange by Lansdell, Botha and Marx (2025), using a panel probit on 302 firms, shows that liquidity and market valuation mitigate delisting risk, while governance quality and shareholder composition lower it further, with macroeconomic conditions exerting additional external pressure.

Macroeconomic and policy conditions constitute a second set of determinants. High inflation, elevated interest rates, restricted credit access, weak economic activity and high unemployment have all been linked to higher delisting probability (Botha, Lansdell & Marx, 2025), with stock-index movements, foreign direct investment and treasury bill rates providing additional explanatory power (Mehmood et al., 2021). Weak macroeconomic signals also intensify information asymmetry and raise issuance costs (Çolak, Durnev & Qian, 2017). The more diversified a firm’s ownership structure and the greater its management transparency, the lower the risk of withdrawal—primarily because no single shareholder can readily assemble the voting majority needed to execute a tender offer; wealth-transfer motives among dominant shareholders thus become a central mechanism in voluntary exit (Konno & Itoh, 2017).

The regulatory environment plays a comparable role. Krastiņš and Pētersons (2017) document that Continental European IPO firms tend to be more mature than their UK counterparts, reflecting differences in the financial-system architecture. More broadly, economic policy uncertainty and business risk are recognised drivers of voluntary withdrawal (Azevedo et al., 2024). In Poland, the 2014 dismantling of open pension fund assets and similarly disruptive episodes weakened institutional demand and contributed to declining investor confidence (Gemra & Rogowski, 2020). Regulatory tightening operates in the same direction: voluntary delistings from US exchanges rose by approximately 30% following the passage of the Sarbanes–Oxley Act (Morgenstern, Nealis & Kleinman, 2004), driven not only by formal compliance burdens but also by rising audit fees (Marosi & Massoud, 2007). The earliest systematic evidence on listing costs (DeAngelo et al., 1984) already showed that firms voluntarily leaving the market improved their profitability afterwards through cost reduction and faster decision-making.

The structure of the private capital market is a further institutional determinant. A well-developed private equity (PE) market lowers the financing cost of remaining private and weakens the incentive to publicly disclose firm-level information (Lattanzio, Megginson & Sanati, 2023). PE-backed buyouts disproportionately target small, undervalued firms with dispersed ownership—features that facilitate post-acquisition control consolidation—and the relevance of these determinants varies with the economic cycle, with free cash flow volatility playing a more substantial role than leverage (Bregneberg & Jensen, 2018). Rising firm-level operating costs unrelated to listing, such as wage growth, may further accelerate exit pressure for less established firms (Baxamusa & Jalal, 2023).

Information asymmetry and disclosure quality have also been documented as delisting determinants. Evidence from the Athens Stock Exchange indicates that delisting probability and time-to-delisting are higher for firms with larger relative offerings and observable earnings management, but lower in ‘hot issue’ periods and where audit quality, prospectus informativeness and voluntary disclosures are strong (Makrominas & Yiannoulis, 2021). Governance quality reinforces these effects: a synthetic index based on supervisory board characteristics constructed from 895 Vietnamese firms indicates that stronger governance, lower state ownership and greater foreign capital participation are associated with reduced delisting risk; although that study addresses involuntary delisting in a frontier market, the underlying governance mechanisms are equally pertinent to the voluntary case (Nguyen, Heui-Yeong Kim & Suardi, 2025).

Despite this extensive literature, empirical investigation remains concentrated in developed markets and selected emerging economies. The CEE region—and Poland in particular—has been examined less systematically, even though the WSE occupies a distinctive position among post-transition markets. As summarized in Table 2, existing evidence on the determinants of stock exchange exit is predominantly drawn from developed markets and a limited number of emerging economies, leaving the CEE region relatively underexplored. The present study addresses this gap by analysing voluntary delistings from the WSE during 2010–2024.

The macroeconomic and firm-level factors discussed above are consistent with the predictions of Market Timing Theory, which holds that the timing of capital market entry and exit reflects perceived divergences between market and intrinsic firm value. In its IPO-side formulation, firms time their public offerings to periods of favourable market conditions, when the ratio of market value to book value is elevated and equity is relatively inexpensive (Taggart, 1977; Chang, Chen & Dasgupta, 2019). Bear markets correspondingly depress IPO volume, as managers postpone offerings until valuations recover (Ritter & Welch, 2002), although firms with urgent financing needs may proceed regardless (Lerner, Shane & Tsai, 2003). IPO activity also rises in anticipation of cyclical upturns, as forecasts of future earnings begin to enter prevailing valuations (Batnini, 2015). The exit-side prediction has traditionally been framed in mirror-image terms: managers and controlling shareholders are expected to repurchase shares or take the firm private when the market undervalues it, capturing the resulting valuation gap (Ikenberry, Lakonishok & Vermaelen, 1995; Ater, 2017). The relationship is more nuanced, however, in markets with concentrated ownership and squeeze-out mechanisms, where the controlling shareholder’s decision balances three offsetting forces: the cost of acquiring residual minority shares (favoured by low prices), the value of the controlling stake itself (favoured by high prices) and the firm’s attractiveness to strategic acquirers (also favoured by sustained high valuations). The net direction is therefore an empirical question, particularly in post-transition markets where dominant shareholders frequently exit by transferring the firm to a strategic or industry buyer rather than by repurchasing it at a discount. The 2010–2024 period under analysis encompasses several phases of macroeconomic stress through which the market-timing channel could plausibly operate. The empirical analysis below examines this channel on the WSE under such conditions, with particular attention to the time-varying effect of market valuation on the delisting hazard. The literature review thus identifies three sets of determinants—financial condition, ownership structure and market valuation—that motivate the three hypotheses developed in the following section.

Drawing on the literature reviewed above and the identified gap concerning the institutional specificities of post-transition markets, the empirical investigation is centred on the most directly relevant determinants of delisting. Unlike developed Anglo-Saxon markets, the Polish capital market is characterised by a relatively short operational history, high ownership concentration and limited free float. Consequently, while several additional factors (e.g. company age at IPO, industry maturity and listing duration) are addressed in the qualitative comparative analysis, the quantitative testing is built around the following three hypotheses.

Hypothesis 1 (H1): Deteriorating and unstable financial performance is associated with an increased probability of delisting. Specifically, a high absolute variance and a negative trajectory in the ROE over the 5 years preceding the decision are expected to correlate with the firm’s withdrawal from public trading.

Hypothesis 2 (H2): High ownership concentration is a key structural determinant of voluntary delisting. In post-transition markets, agency dynamics and the regulatory architecture of squeeze-out mechanisms imply that the presence of a dominant shareholder exceeding the 90% voting-rights threshold is associated with a higher probability of exit from the public market.

Hypothesis 3 (H3): The relationship between market valuation and voluntary delisting is time-dependent. A persistently high P/E ratio is associated with an increased probability of delisting, and the strength of this association rises with listing tenure.

Case study methodology has been the dominant analytical tool in previous research on emerging and developing market delistings. Bilel and Khammassi (2024) analysed the phenomenon across selected firms from Tunisia, Morocco and Egypt, while Muyeche, Murape and Mungwini (2014) examined the financial performance preceding delisting on the Zimbabwe Stock Exchange.

Given the exploratory nature of the present research, a multiple cross-case study methodology was adopted. A single-case approach was rejected because it does not permit the generalisation of findings. The analysis encompasses 10 purposively selected companies that voluntarily delisted from the WSE between 2010 and 2024. The Polish market, as a leading post-transition economy, provides a compelling setting in which to examine the life cycle of public companies under conditions of systemic uncertainty and a recent preponderance of delistings over IPOs.

The classification of Poland’s capital market warrants explicit attention. The WSE was reclassified as a Developed Market by FTSE Russell in September 2018, making Poland the first post-communist country to achieve this status. Morgan Stanley Capital International (MSCI), however, continues to classify Poland as an Emerging Market, and several structural characteristics—relatively concentrated ownership patterns, lower market liquidity compared with Western European peers, a shorter institutional history and ongoing regulatory convergence with EU standards—indicate that the WSE retains features distinctive to post-transition markets (Fîrcescu, 2012; Adamska, Dąbrowski & Grygiel-Tomaszewska, 2016). This study therefore uses the term ‘post-transition market’ to reflect Poland’s intermediate position: an economy that has achieved significant institutional maturity while retaining structural vulnerabilities characteristic of the Central and Eastern European region. This framing is consistent with recent scholarship that treats CEE markets as a distinct analytical category rather than mapping them onto the developed/developing binary (Latinovic & Milosevic, 2019; Dodig, 2020).

Sample selection prioritised diversification across industries (chemical, real estate, banking, manufacturing, food, bookmaking, services and media), operational profiles and listing durations. Between 2010 and 2024, approximately 241 companies voluntarily delisted from the main market of the WSE, of which the 10 cases selected for this study represent approximately 4%. The selection was purposive rather than exhaustive, targeting large-scale, industry-leading entities whose delistings attracted significant market and media attention and whose financial data were sufficiently available for analysis. While this sampling strategy limits statistical representativeness, it maximises analytical depth—a recognised advantage of the multiple case study methodology (Yin, 2018). Two of the selected firms had previously been State Treasury entities, providing additional insight into the post-privatisation phase of the Polish market.

The qualitative analysis drew on WSE regulatory communications and the EMIS financial database. Each case was initially analysed independently before synthesis within a cross-case framework to identify common strategic patterns. The cross-case synthesis followed the replication logic recommended by Yin (2018), under which each case is treated as an independent experiment. After individual case analysis, the results were compared across all 10 cases using a pattern-matching approach: for each hypothesised determinant, the analysis assessed whether the predicted pattern (e.g., high ownership concentration → delisting) was consistently observed, partially supported or contradicted. Convergent findings across cases were treated as consistent patterns, while divergent outcomes prompted investigation of contextual moderators such as industry characteristics or timing relative to macroeconomic shocks.

The legal framework governing voluntary delisting in Poland is established principally by the Act of 29 July 2005 on Public Offering and the Conditions for Introducing Financial Instruments to an Organised Trading System and on Public Companies (Dz.U.2025.592 t.j.). Under this legislation, a shareholder wishing to delist a company must first conduct a mandatory tender offer (wezwanie) for the remaining shares. The critical threshold is 90% of total voting rights—once exceeded, the majority shareholder may execute a compulsory buy-out (squeeze-out) of the minority (Art. 82). The tender offer price must not be lower than the average market price of the preceding 6 months or, alternatively, the highest price paid by the offeror in the preceding 12 months. The Polish Financial Supervision Authority (KNF) oversees the process and has the power to intervene in cases of inadequate pricing or procedural irregularities. This regulatory framework creates a distinctive institutional context for voluntary delisting, in which the 90% threshold effectively determines the structural feasibility of going private—a pattern observed in all 10 analysed cases.

To complement and test the qualitative patterns, the study employs two quantitative techniques previously applied in the delisting literature—PSM and the Cox proportional-hazards model (Pour & Lasfer, 2013; Azevedo et al., 2024). Financial indicators for the 10 delisted firms, including ROE, the P/E ratio and total assets, were extracted from the EMIS and Orbis databases for the 5-year period preceding the delisting event.

To construct a comparable control group of active, non-delisted companies, PSM was applied. For each firm in the treatment group, a matched ‘twin’ company was selected from the same WSE sector sub-index. The matching used a logistic regression to estimate the propensity score as: PX=P(D=1|X) P\left( X \right) = P(D = 1|X) where the probability of being assigned to the treatment group (D = 1) is conditioned on observable characteristics (X). A nearest-neighbour 1:1 matching algorithm was applied, using as control variables the industry sector, company age prior to IPO, the 5-year average absolute change in ROE, the 5-year average P/E ratio and total assets in the year of delisting.

The Cox proportional-hazards model was then estimated to identify the factors associated with delisting risk and to capture the time-varying impact of financial variables. The general form of the model is: h(t|X)=h0(t)*expβ1X1+β2X2+⋯+βkXk h(t|X) = {h_0}(t)*{\rm{exp\;}}\left( {{\beta _1}{X_1} + {\beta _2}{X_2} + \cdots + {\beta _k}{X_k}} \right) where h(t | X) is the hazard rate at time t, h₀(t) is the baseline hazard, X_i are the explanatory variables (P/E, ROE, ownership concentration and firm size) and β_i are the estimated coefficients. This specification allows the analysis to examine how corporate attributes are associated with the intensity and timing of the withdrawal event, moving beyond static comparisons to capture the dynamic features of voluntary delisting in post-transition markets.

The multiple cross-case study of 10 selected entities provided an exploratory foundation for testing the determinants of delisting in a post-socialist market context. The findings from this stage highlighted the distinct nature of the Polish market compared with developed economies. The results of the hypothesis verification are summarized in Table 7.

The preliminary analysis allowed for the verification of the following patterns:

Ownership and Control: One of the most notable findings is the significance of high ownership concentration. All analysed entities reached the 90% ownership threshold by a single shareholder, facilitating the legal ‘squeeze-out’ process under Polish law (Act of July 29, 2005). This confirms that in transitioning markets, delisting is frequently driven by the strategic interests of dominant shareholders rather than broad market sentiment.

Financial Performance (ROE): The study confirmed that deteriorating financial health is a primary driver. A vast majority of the firms exhibited negative average ROE in the 5 years preceding delisting, supporting the thesis that sustained unprofitability encourages firms to leave the public market to reduce compliance costs and restructure privately.

Industry Maturity: All cases belonged to mature sectors with stable but slow growth rates. The limited need for further capital expansion in these industries often makes the costs of maintaining a public listing outweigh the benefits.

Other Factors: Interestingly, factors such as company age at IPO, listing duration, and the presence of PE funds were not found to be significant determinants in the Polish context. Unlike developed markets, where younger firms are often more prone to delisting due to failure, the Polish wave involved many established, former State Treasury companies where delisting resulted from privatisation or consolidation.

The second stage of the study utilised a Cox proportional-hazards model to rigorously test the three core hypotheses. The quantitative results provided a more nuanced perspective on market valuation. While the static case studies initially failed to confirm a clear link between low valuation and delisting, the time-dependent model revealed that the P/E ratio is a critical, time-varying determinant (HR = 2.91; p = 0.0045). This suggests that sustained undervaluation eventually triggers a strategic exit, as the market fails to reflect the firm’s perceived intrinsic value over time.

Furthermore, the model identified firm size (measured by total assets) as a significant factor, with larger firms exhibiting a higher hazard rate for delisting, potentially due to their attractiveness as targets for major restructuring or consolidation by international groups.

This research should be viewed as exploratory in nature. The study focuses primarily on the Polish market within a relatively narrow time horizon (2010–2024), which limits the generalisability of the findings to broader CEE markets. Most importantly, the small sample size (10 firms and 10 delisting events) imposes a significant constraint on the statistical power of the analysis and calls for particular caution in interpreting the results.

This limitation is especially relevant in the context of the Cox proportional-hazards models employed in the study. Given the small number of events, as well as the presence of non-linear specifications and time-varying effects, the estimated coefficients and hazard ratios should be interpreted as indicative rather than definitive. In particular, the results related to interaction terms and time-dependent effects may be sensitive to sample composition and model specification.

Despite these constraints, the study provides exploratory and multidimensional insights for various stakeholders:

For Investors: The identified patterns, particularly the combination of high ownership concentration and low P/E ratios, serve as a preliminary valuable early-warning system for squeeze-out risks, allowing minority shareholders to better assess the potential for mandatory buyouts at prices that may not satisfy long-term valuation expectations.

For Regulators: The findings underscore the need for enhanced protection of minority shareholders in post-transition markets, where high concentration and low liquidity can distort market mechanisms. Recommendations include ensuring more transparent valuation processes during tender offers.

For Researchers: This study highlights the necessity of using mixed-methods approaches to capture the dynamic and institutionally embedded nature of delisting in developing economies, paving the way for larger-scale comparative studies across the CEE region.