An empirical investigation of going private decisions of U.S. firms

Gleason, Kim; Payne, Bruce C.; Wiggenhorn, Joan

doi:10.1007/bf02751643

Cited by 17 publications

(18 citation statements)

References 13 publications

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“…However, our findings of leverage are consistent with those of Gleason, Payne, & Wiggenhorn (2007). We expect undervalued firms to have a higher probability to go private.…”

supporting

confidence: 87%

“…Palepu, 1982;Powell, 2004;Sorensen, 2000;Stevens, 1973;Tsagkanos, 2008;Weir, Laing, & Wright, n.d.;Wi Saeng Kim & Lyn, 1991) show that target firms are different from acquiring firms, target firms or nontarget firms, and that acquirers, target, and non-targets have particular differing firm characteristics (Gutsche, 2013). Moreover, similar differences between going-private and non-going private firms have been identified in the literature that analyzes the relative firm characteristics of going private firms (shortly before the going private transaction) and a non-going private control group (Boot, Gopalan, & Thakor, 2008;Gleason, Payne, & Wiggenhorn, 2007;Halpern, Kieschnick, & Rotenberg, 1999;Kieschnick, 1998;Lehn & Poulsen, 1989;Loh, 1992;Maupin, 1987).…”

Section: Introductionmentioning

confidence: 88%

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The firm lifecycle as a determiant of going private decisions

Gutsche

Schroeter

2017

Int. conf. adv. bus. manag. law

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We examine the impact of corporate lifecycle on the likelihood of becoming a voluntary going private firm. We apply the firm's capital mix as a measure for the stage in a firm's lifecycle. In doing so, we provide a framework and evidence on firm characteristics of going private firms. We find that the decision to go private depends on the firm's lifecycle. Young firms, with low retained earnings are more likely to go private than mature or old firms. We also find that relative firm characteristics of going private and non-going private firms are consistent with the findings on relative firm characteristics in M & A activity research for acquirers (bidders, non-targets) vs. nonacquirer (non-bidders, and targets) and that these relative firm characteristics of going private and non-going private firms stay constant throughout all stages of the corporate lifecycle.

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“…However, our findings of leverage are consistent with those of Gleason, Payne, & Wiggenhorn (2007). We expect undervalued firms to have a higher probability to go private.…”

supporting

confidence: 87%

Section: Introductionmentioning

confidence: 88%

The firm lifecycle as a determiant of going private decisions

Gutsche

Schroeter

2017

Int. conf. adv. bus. manag. law

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“…Holmstrom and Kaplan (2003) mention that this compliance cost is a heavy burden for small firms. In order to avoid the complicated procedures and the high cost of complying with SOX requirements, small firms in the US are inclined to reduce the amount of its outstanding shares or directly apply for withdrawal from the market (Akhigbe and Martin, 2006;Block, 2004;Koehn and Del Vecehio, 2004;Mount, 2005).…”

Section: Hypothesesmentioning

confidence: 99%

Can the Audit Committee Provide Better Oversight of Listed Companies? – An Efficiency of Cash Holdings Perspective

Huang

Chen²,

Lu³

2016

AJFA

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<p>This study attempts to inspection the efficient of using cash holdings whether is improved after setting up audit committee sound corporate governance from the perspective of reducing agency costs. We use the difference in difference method to investigate the effect of oversight of audit committee from 2007 to 2010 the company with audit committee for sample. The empirical results show that the using efficiency of cash holdings isn’t promoted after setting up audit committee with all listed companies sample. We further divided the sample into the over-the-counter (OTC) market and the Taiwan Stock Exchange (TSE) market according to the stock market feather. The empirical indicated that the Taiwan Stock Exchange (TSE) market listed sample exhibited the effect of oversight of audit committee; however, the over-the-counter (OTC) market listed is not. It indicated that the different market structure did affect the effect of oversight of audit committee.</p>

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“…If average returns are 15–20 per cent, and 50 per cent of funds pay no carried interest, some funds must perform much more successfully than others. Evidence from the United States suggests that once a firm has been taken private by private equity owners, such firms on average provide investors with lower returns, experience the uncertainty of greater financial distress, but in the short‐term experience higher growth prospects and the associated risk of greater financial leverage (Gleason et al ., 2007). Similarly, more critically focused American literature suggests that a primary reason for taking firms private is value extraction, not efficiency, and relates to the avoidance of compliance and transparency costs post‐Enron and the provisions of the Sarbanes–Oxley legislation, that is avoiding compliance costs facilitates further value extraction (Block, 2004; GAO, 2006).…”

Section: An Analytical Framework: Private Equity Investor Value Anmentioning

confidence: 99%