Undervaluation, private information, agency costs and the decision to go private.
Weir, C.; Laing, D.; Wright, M.
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.
|Journal Article Type||Article|
|Publication Date||Dec 30, 2005|
|Journal||Applied financial economics|
|Publisher||Taylor & Francis|
|Peer Reviewed||Peer Reviewed|
|Institution Citation||WEIR, C., LAING, D. and WRIGHT, M. 2005. Undervaluation, private information, agency costs and the decision to go private. Applied financial economics [online], 15(13), pages 947-961. Available from: https://doi.org/10.1080/09603100500278221|
|Keywords||Private companies; Undervaluation; Leveraged buyouts; LBOs; Public to private transactions|
WEIR 2005 Undervaluation, private information