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| Author: | Weir, C. Laing, D. Wright, M. |
| Title: | Incentive effects, monitoring mechanisms and the market for corporate control: An analysis of the factors affecting public to private transactions in the UK |
| Journal: | Journal of Business Finance and Accounting
2005 : JUN/JUL, VOL 32:5-6, p. 909-943 |
| Index terms: | Company control Incentives Stock markets Markets United Kingdom |
| Language: | eng |
| Abstract: | This study investigates the factors influencing the decision to change the status of a publicly quoted company to that of a private company. It is found that firms that go private (henceforth as: going-pr.) are more likely to have higher CEO ownership (here as: o-ship.) and higher institutional o-ship. In relation to their board structures, firms going-pr. 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. It is not found that firms going-pr. experience a greater threat of hostile acquisition. The results are therefore consistent with incentive and monitoring explanations of going-pr. Calculation of the probability of going-pr. shows that incentive effects are stronger than the monitoring effects. |
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