On the Heterogeneity of Levered Going Private Transactions

Posted: 8 Dec 1998

See all articles by Paul Halpern

Paul Halpern

University of Toronto - Rotman School of Management

Robert L. Kieschnick

University of Texas at Dallas

Wendy Rotenberg

University of Toronto - Rotman School of Management

Abstract

In contrast to prior literature, we argue that there are two types of poorly performing firms going private through a levered buyout (LBO). One group consists of firms in which managers own an insignificant fraction of their firm?s stock and are vulnerable to a hostile takeover. The other group consists of firms in which managers own a significant fraction of their firm?s stock and so face little risk of a hostile takeover. Our evidence indicates that are two such groups of LBOs and that their motivations and post-transaction actions are different.

JEL Classification: G31, G32

Suggested Citation

Halpern, Paul J. and Kieschnick, Robert L. and Rotenberg, Wendy, On the Heterogeneity of Levered Going Private Transactions. Review of Financial Studies, Vol. 12, Issue 2. Available at SSRN: https://ssrn.com/abstract=140411

Paul J. Halpern (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-2825 (Phone)
416-971-3048 (Fax)

Robert L. Kieschnick

University of Texas at Dallas ( email )

800 W. Campbell Rd, SM31
Richardson, TX 75080
United States
972-883-6273 (Phone)

HOME PAGE: http://www.utdallas.edu/~rkiesch/

Wendy Rotenberg

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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