The sources of shareholder wealth gains from going private transactions: The role of controlling shareholders

This paper examines the effect of multiple large shareholders (MLS) on debt choice. Using a sample of 654 French‐listed firms over the period 1998‐2013, we find that reliance on bank debt increases with the presence and voting power of MLS. This result is robust to endogeneity concerns and to several sensitivity tests. Moreover, we find that the effect of MLS on debt choice is more pronounced when agency problems between controlling and minority shareholders are more severe. Taken together, our results suggest that MLS reduce the controlling owner's incentive to avoid bank monitoring, leading to greater reliance on bank debt.

show abstract

“…() and Boubaker et al. (), who provide evidence that families have strong incentives to monito controlling owners.…”

Section: Empirical Evidencementioning

confidence: 99%

The Role of Multiple Large Shareholders in the Choice of Debt Source

Boubaker¹,

Rouatbi²,

Saffar

2016

Financial Management

Self Cite

View full text Add to dashboard Cite

show abstract

“…Except for Boubaker et al . (), European GPTs are found to exhibit a lower premium than GPTs examined in the USA and UK. For example, Geranio and Zanotti () and Bajo et al .…”

Section: Economic Consequences Of Delistingmentioning

confidence: 87%

Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Martínez

Serve

2016

Journal of Economic Surveys

View full text Add to dashboard Cite

This paper discusses the literature on delisting, drawing on USA and international evidence. Given the great heterogeneity in delisting operations, we first consider the standard existing typology based on the initiator of the delisting (the stock market authorities, or the firm itself). Second, while managers often cite high compliance costs (especially due to Sarbanes–Oxley Act implementation) as the official reason for the voluntary delisting of their firm, we highlight that firms face different trade‐offs in their delisting decision. We also examine the reasons for involuntary delisting, especially the delisting dilemma faced by stock market authorities when the firm violates the listing requirements. Next, we review the economic consequences of delisting in terms of value creation or value destruction for shareholders. Finally, noting gaps in the literature and other contrasting results, we propose suggestions for future research.

show abstract

“…The failure to meet market criteria subsample and the company request subsample appear to have smaller losses, than the overall sample. The former exhibits a five-day CAAR (-4, 0) of -8.27% (t-statistic = -2.59) and a two-day CAAR (-1, 0) of -5.04% (t-statistic = -2.44), while the latter has a five-day CAAR (-4, 0) of -5.25% (t-statistic = -1.76) and a three-day CAAR (-2, 0) of -2.02% (t-statistic = -2.52) 6 . The comparable five-day CAAR in Liu and Stowe (2005) is only marginally negative.…”

Section: Short-term Abnormal Returnsmentioning

confidence: 99%

Wealth effects of delistings announcements in Europe

Δασίλας

Grose

Spyridis

2017

Investment Management and Financial Innovations

View full text Add to dashboard Cite

Using a European dataset of 478 delistings, the authors investigate the role of corporate governance in the short-term performance of European stocks around a delisting decision. In order to achieve this, the authors utilize the event study methodology in multiple contexts and cross-sectional regression analysis. This is particularly evident in high shareholder protection environments in a finding, related with investors' perception of the security they experience in the particular market, as well as the afterlife of the under delisting stock and the potential of value creation or destruction. In high investor protection environments the delisting event causes negative abnormal returns both for voluntary and involuntary delistings. The authors conjecture that these delistings, whether referring to LBOs, delistings from secondary listings or BOSOs, are strategic decisions, and in this respect pre-delisting shareholders acknowledge that there is life after delisting. Under low investor protection the above holds only for involuntary ones. Companies failing to meet capital market criteria and voluntary delistings appear to have significantly smaller losses than under bankruptcy firms, on average, on the eve of the delisting event. These abnormal returns are basically affected by the firms' financial soundness and the corporate governance level pertaining in the host market. Cross-sectional regression analysis shows also the inverse relationship between the degree of governance structures and market reaction to delistings announcements.

show abstract

The sources of shareholder wealth gains from going private transactions: The role of controlling shareholders

Cited by 46 publications

References 53 publications

The Role of Multiple Large Shareholders in the Choice of Debt Source

The Role of Multiple Large Shareholders in the Choice of Debt Source

Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Wealth effects of delistings announcements in Europe

Contact Info

Product

Resources

About