The Role of Disclosure in Closing Going Private Deals.

54 Pages Posted: 1 Aug 2018 Last revised: 14 Apr 2021

See all articles by Pietro A. Bianchi

Pietro A. Bianchi

Florida International University (FIU)

Miguel Minutti-Meza

University of Miami - Department of Accounting

Matthew Phillips

University of Miami Business School

Maria Vulcheva

Florida International University

Date Written: July 31, 2018

Abstract

A perceived conflict of interest in going private transactions can occur when a company transfers ownership and control to affiliated parties and terminates its public status. For example, conflict can occur if acquiring owners and selling owners have dissimilar information and competing incentives. These deals are subject to mandatory disclosure requirements to inform shareholders before the transaction is put to a general vote. However, the expected incremental role of these disclosures is uncertain. We demonstrate that disclosure volume is positively associated with the likelihood of closing a deal. However, we also find that disclosure volume is positively associated with two proxies for the intensity of shareholders’ negotiations: upward price revisions and litigation. Our findings offer insights into the incremental benefits and costs of disclosure in this setting. Specifically, increased disclosure can facilitate the completion of going private deals and exiting shareholders can use it to negotiate better terms.

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. (July 31, 2018). Available at SSRN: https://ssrn.com/abstract=3223872 or http://dx.doi.org/10.2139/ssrn.3223872

Pietro A. Bianchi

Florida International University (FIU) ( email )

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

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

University of Miami Business School ( email )

Coral Gables, FL 33146-6531
United States

Maria Vulcheva

Florida International University ( email )

11200 SW 8 Street RB244B
Miami, FL 33199
United States

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