Incentive Effects, Monitoring Mechanisms and the Market for Corporate Control: An Analysis of the Factors Affecting Public to Private Transactions in the UK
By C. Weir, D. Laing, Mike Wright. 2005
124 citations recorded by the source corpus.
This paper investigates the factors that influence the decision to change the status of a publicly quoted company to that of a private company. We find that firms that go private are more likely to have higher CEO ownership and higher institutional ownership. In relation to their board structures, firms going private tend to have more duality but there is no statistical difference in the proportion of non-executive directors. They do not show signs of having excess free cash flows but there is some evidence of lower growth opportunities. We do not find that firms going private experience a greater threat of hostile acquisition. The results are therefore consistent with incentive and monitoring explanations of going private. Calculation of the probability of going private shows that incentive effects are stronger than the monitoring effects. Copyright Blackwell Publishers Ltd, 2005.
Subfields: Accounting
View Paper: https://www.semanticscholar.org/paper/01fb02ae061c0d92391279c752a40e1cb2b455ff
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In Accounting
- Soojin Yim
- Toby E. Stuart
- Olav Sorenson
- Isin Guler
- David H. Hsu
- Ethan Mollick
- Mike Wright
- Dimo Dimov
Citations in the corpus
- Board Interlocks and the Propensity to be Targeted in Private Equity Transactions (2010, background): “In a sample with 95 UK deals in 1998-2000, Weir, Laing, and Wright (2005) find that CEO and institutional ownership positively related to the likelihood of going private.”
- The impact of corporate governance mechanisms on value increase in leveraged buyouts (2007, unknown): “Halpern et al. (1999), Opler and Titman (1993) for the US and Weir et al. (2005) and Renneboog et al. (2007-this issue) for the UK, however, do not find support for the free cash flow argument as a driver of public to private buyouts.”