No abstract

We investigate the source of stockholder gains in going private transactions. We find support for the hypothesis advanced by Jensen that a major source of these gains is the mitigation of agency problems associated with free cash flow. Using a sample of 263 going private transactions from 1980 through 1987, our results indicate a significant relationship between undistributed cash flow and a firm's decision to go private. In addition, we find that premiums paid to stockholders are significantly related to undistributed cash flow. These results are especially strong for firms that went private between 1984 and 1987 and also for firms whose managers owned relatively little equity before the going private transaction. * Office of Economic Analysis, Securities and Exchange Commission and Department of Bankingand Finance, University of Georgia, respectively. We thank Nick Dopuch, Larry Harris, Mark Mitchell, Jeffry Netter, Jay Ritter, Michael Ryngaert, William Schwert, and Charles Trczinka for many helpful comments and suggestions. In addition, we are indebted to Mary Dehner for editorial assistance. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the authors and do not necessarily reflect the views of the Commission or of Kenneth Lehn's colleagues on the staff of the Commission.

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"We examine the determinants of the size and composition of corporate boards for a sample of 82 US companies that survived during the period 1935-2000. Our hypotheses lead to predictions that firm size, growth opportunities, merger activity, and geographical expansion are important determinants of these board characteristics. We find empirical evidence that the four variables are significant determinants of the size and/or composition of boards. After controlling for these determinants of board characteristics, we find no robust relation between firm performance and either board size or composition". Copyright (c) 2009 Financial Management Association International.

We investigate the source of stockholder gains in going private transactions. We find support for the hypothesis advanced by Jensen that a major source of these gains is the mitigation of agency problems associated with free cash flow. Using a sample of 263 going private transactions from 1980 through 1987, our results indicate a significant relationship between undistributed cash flow and a firm's decision to go private. In addition, we find that premiums paid to stockholders are significantly related to undistributed cash flow. These results are especially strong for firms that went private between 1984 and 1987 and also for firms whose managers owned relatively little equity before the going private transaction.