The Role of Disclosure in Closing Going Private Deals.

55 Pages Posted: 1 Aug 2018 Last revised: 4 Aug 2022

See all articles by Pietro A. Bianchi

Pietro A. Bianchi

Florida International University

Miguel Minutti-Meza

University of Miami - Department of Accounting

Matthew Phillips

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Maria Vulcheva

Florida International University

Date Written: August 4, 2022

Abstract

Going private transactions involve a perceived conflict of interest that occurs when (i) management and other insiders transfer ownership and control away from minority shareholders to affiliated parties, and (ii) the company terminates its public status. These deals are subject to special SEC rules that mandate management to provide detailed disclosure to all shareholders before a general vote. We examine whether disclosure mitigates or exacerbates frictions between minority shareholders and the acquiring parties. We find that the volume of disclosure is positively associated with the likelihood of closing a deal. However, the volume of disclosure is also positively associated with the intensity of shareholders’ negotiations (i.e., higher likelihood of upward price revisions and shareholder litigation). Our findings suggest that disclosure plays an incremental role in completing going private transactions and shed light on the trade-offs that managers and other insiders face when determining the extent of disclosure in SEC filings.

Keywords: disclosure; going private; acquisitions; litigation; SEC filings.

JEL Classification: M41, M48, G34

Suggested Citation

Bianchi, Pietro A. and Minutti-Meza, Miguel and Phillips, Matthew and Vulcheva, Maria, The Role of Disclosure in Closing Going Private Deals. (August 4, 2022). Available at SSRN: https://ssrn.com/abstract=3223872 or http://dx.doi.org/10.2139/ssrn.3223872

Pietro A. Bianchi

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://https://business.fiu.edu/faculty/expert-guides.cfm?FlagDirectory=Display&Emp=bianchip

Miguel Minutti-Meza (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-6287 (Phone)

Matthew Phillips

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Maria Vulcheva

Florida International University ( email )

11200 SW 8 Street RB244B
Miami, FL 33199
United States

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