Going Private Transactions and the Market for Corporate Control

43 Pages Posted: 28 Jul 2003  

Charlie Weir

Robert Gordon University - Aberdeen Business School

Mike Wright

Nottingham University Business School

David Laing

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

Date Written: July 2003

Abstract

This paper investigates the extent to which firms going private have different characteristics from other acquired firms. We find the firms going private have higher CEO shareholdings and higher institutional shareholdings. In addition, they have poorer growth prospects. However, there is no evidence that they have different internal governance structures, have higher free cash flow or spend different amounts on capital projects. Neither do they experience greater pressure from the market for corporate control. It was also found that the premiums received by shareholders in firms going private, where the CEO shareholdings were low, were lower than those received by shareholders of other acquired firms. Overall the results tend to offer stronger support for the financial incentive hypothesis than for the financial realignment hypothesis.

JEL Classification: G32, G34

Suggested Citation

Weir, Charlie and Wright, Mike and Laing, David, Going Private Transactions and the Market for Corporate Control (July 2003). Available at SSRN: https://ssrn.com/abstract=420901 or http://dx.doi.org/10.2139/ssrn.420901

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)

Mike Wright

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5257 (Phone)
+44 115 951 5204 (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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