The Real Effects of Disclosure in Going Private Deals

54 Pages Posted: 27 Mar 2023

See all articles by Pietro A. Bianchi

Pietro A. Bianchi

affiliation not provided to SSRN

Miguel Minutti-Meza

University of Miami - Department of Accounting

Maria Vulcheva

Florida International University

Date Written: March 1, 2023

Abstract

Disclosure in going private transactions has become a topic of increasing interest for regulators and policymakers. Going private transactions are subject to special SEC rules that mandate management to provide detailed disclosure to all shareholders before a general vote. We examine the role of disclosure in addressing the frictions between sellers and buyers. We find that disclosure volume is positively associated with the likelihood of closing a deal. However, disclosure volume is also positively related to the intensity of shareholders’ negotiations, increasing the likelihood of upward price revisions, and shareholder litigation. Our findings speak to the extent to which the SEC rules fulfill the regulator’s intent when mandating going-private disclosures. Our findings suggest that disclosure has real effects related to the success of going private transactions, and shed light on the trade-offs that buyers face when determining the extent of disclosure in SEC filings.

Keywords: going private transactions, real effects, disclosure, litigation, SEC filings, acquisitions

JEL Classification: M41, M48, G34

Suggested Citation

Bianchi, Pietro A. and Minutti-Meza, Miguel and Vulcheva, Maria, The Real Effects of Disclosure in Going Private Deals (March 1, 2023). University of Miami Business School Research Paper No. 4392782, Available at SSRN: https://ssrn.com/abstract=4392782 or http://dx.doi.org/10.2139/ssrn.4392782

Pietro A. Bianchi (Contact Author)

affiliation not provided to SSRN

Miguel Minutti-Meza

University of Miami - Department of Accounting ( email )

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

Maria Vulcheva

Florida International University ( email )

11200 SW 8 Street RB244B
Miami, FL 33199
United States

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