Going Private Transactions and Corporate Governance in the UK

43 Pages Posted: 11 Nov 2002

See all articles by Charlie Weir

Charlie Weir

Robert Gordon University - Aberdeen Business School

David Laing

Robert Gordon University - Centre for the Enhancement of Learning and Teaching (CELT)

Date Written: October 28, 2002

Abstract

We analyse the agency influences on an increasingly common phenomenon, the change of status from public to private. We find that companies going private are more likely to have higher CEO and institutional shareholdings. We also find firms going private are more likely to have the same person as CEO and chairman. There is no evidence that they have excess free cash flow but they do have lower growth opportunities. We do not find that firms going private experience a greater threat of hostile takeover than firms remaining public. Our results are consistent with incentive and monitoring explanations of the decision to go private but are inconsistent with the ineffective governance hypothesis.

Keywords: CEO shareholdings, agency theory, going private transactions, LBOs, takeovers, corporate governance, Cadbury Compliance, free cashflow, takeover threat, board of directors, duality, market for corporate control, UK

JEL Classification: C31, G50, D21, D44, D82, L16, L21, L20, M21

Suggested Citation

Weir, Charles and Laing, David, Going Private Transactions and Corporate Governance in the UK (October 28, 2002). Available at SSRN: https://ssrn.com/abstract=345820 or http://dx.doi.org/10.2139/ssrn.345820

Charles Weir (Contact Author)

Robert Gordon University - Aberdeen Business School ( email )

Garthdee Road
RGU
Aberdeen AB10 7QE
United Kingdom
0044 1224 263800 (Phone)
0044 1224 263838 (Fax)

David Laing

Robert Gordon University - Centre for the Enhancement of Learning and Teaching (CELT) ( email )

Schoolhill
Aberdeen, Scotland AB10 1F
United Kingdom
0044 1224 262246 (Phone)
0044 1224 263344 (Fax)

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