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

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.

• Publication year

  2005

• Venue

  Applied Financial Economics

• Publication date

  2005-09-01

• Fields of study

  Business, Economics

• Identifiers
  DOI 10.1080/09603100500278221
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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