Financial Innovations in Equity Issuance: A Prague Stock Exchange Review

A start of a modern-era financial innovation on capital and financial markets is usually dated around the 1970s. Drawing on two broad assumptions that (i) capital markets are important and (ii) hybrid securities are an important part of capital markets, since hybrid issues exist and continue existing, this article provides a review of all outstanding equity instruments, irrespective of whether listed or private, for all issuers whose shares are traded on the Prague Stock Exchange (“PSE”) in order to determine whether the financial innovations as existing on a more developed capital markets have found their seeds on the market or whether the market is largely ignorant of such developments. This paper is divided into three parts: part one provides a brief description of some innovations in capital issuance; the second part provides a review of equity instruments issued by 25 issuers, in which shares are traded on PSE, irrespective whether those are listed or not; and the third part summarizes findings and concludes that a hybrid instrument has been identified at two issuers only, both foreign ones. The most recent annual reports of respective issuers were utilized for the review, accompanied by other public sources if necessary.