Undervaluation, private information, agency costs and the decision to go private

By C. Weir, D. Laing, Mike Wright. 2005

115 citations recorded by the source corpus.

There is widespread anecdotal evidence that poor stock market performance is an important reason for taking a company private. The results support the perceived undervaluation hypothesis. The finding also applies to management buy-outs, which indicates that the management of these firms had private information. It is also found that firms going private had non-optimal governance structures, higher board and institutional ownership. The last finding is consistent with going private transactions providing institutions with a means of existing firms with poor market valuation, particularly during a time of very limited pressure from the market for corporate control.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/a01b9a817f96cf4565819800b117a2116711f947

Citations in the corpus

• Private Equity, Leveraged Buyouts and Governance (2007, unknown): “[insert Table 4 near here] Weir and Wright (2007) report that PTPs have higher duality of CEO and board Chair than traditional acquisitions of corporations.”