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The Decision to Delist from the Stock Market Theory and Empirical Evidence of Going Private

:	Barbara Fidanza, Ottorino Morresi, Alberto Pezzi
:	The Decision to Delist from the Stock Market Theory and Empirical Evidence of Going Private
:	Palgrave Macmillan
:	9783319950495
:	1
:	CHF 57.00
:

:	Einzelne Wirtschaftszweige, Branchen
:	English

:	185
:	Wasserzeichen/DRM
:	PC/MAC/eReader/Tablet
:	PDF

In an organized and organic way, this book covers all the possible theoretical and empirical facets of delisting, adding to the well-developed literature on IPOs. IPO and delisting are strictly related; the reasons for delisting may be found in the loss of the incentives that drove the firm to the public market in the past. However, the book presents unique motivations not directly related to the IPO decision. This book covers what the existing literature has not in focusing on specific aspects such as market liquidity and microstructure, listing costs, market for corporate control, corporate governance issues and so on. Of interest to academics and students, this contribution puts all pieces in order and finds a thread that can link each theory to the others.

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Barbara Fidanza is an Associate Professor of Corporate Finance at the University of Macerata, Italy. She holds a PhD in Corporate Finance from the University of Trieste, Italy. She has teaching experience in the theory and principles of management, corporate finance, and financial analysis. Her research interests include capital structure, asset pricing, corporate valuation and stakeholder theory.

O torino Morresi is a Professor of Finance at the University of Rome 'Roma Tre', Italy. He holds a PhD in Corporate Finance from the University of Trieste, Italy and was a post-doctoral student at the Cass Business School, UK. His research interests include capital structure, M&As, family business and corporate governance. He teaches Corporate Finance and Financial Analysis. He authored the 2014 Palgrave Macmillan book Cross-Border Mergers and Acquisitions: Theory and Empirical Evidence, jointly with Alberto Pezzi.

Alberto Pezzi is an Associate Professor of Strategic Management and Director of the Master in Banking and Insurance Management at the University of Rome 'Roma Tre', Italy. He holds a PhD in Banking and Finance from the University of Rome 'Tor Vergata', Italy. Current research interests are internationalization and strategic investment decisions. He authored the 2014 Palgrave Macmillan bookCross-Border Mergers and Acquisitions: Theory and Empirical Evidence jointly with Ottorino Morresi.

	Preface	5
	Contents	8
	List of Tables	10
	Chapter 1: Facts, Figures and Theory	11
	1.1 Introduction	11
	1.2 Concepts and Definitions	17
	1.3 Going Private in the US: Regulations and Legislation	19
	1.4 Why Do Firms Go Private? Theoretical Models	21
	1.4.1 Information-Based Theories	22
	Adverse Selection	22
	Information Production Cost	24
	Serendipitous Information Production	29
	The Process by Which Information Is Incorporated into the Value of Publicly Traded Shares	30
	The Interaction Between Serendipitous Information and Costly Information	30
	The Interaction Between Information Content of a Firm’s Stock Price, the Amount of Capital Invested in Growth Opportunities, and Their Value	31
	The Choice Between Public and Private Financing: Some Insights from the Model	31
	The Trade-Off Between Going Public or Remaining Private: A Summary of Scenarios	32
	Empirical Implications and Intuitions for the Going Private Decision	33
	Information Acquisition Costs and the Value of Confidentiality	35
	Implications for the Going Private Decision	37
	Investor Recognition	37
	1.4.2 Investment Policy	41
	1.4.3 Access to Capital	43
	1.4.4 Liquidity	44
	1.4.5 Corporate Governance, Control Considerations and the Tension Between Liquidity and Control	52
	Timing	56
	The Choice Regarding Project Implementation and Resolution of a Potential Disagreement Between Managers and Investors	57
	Investor Participation, Agreement, and Firm Value	59
	Liquidity Needs and Costs	60
	Managerial Autonomy	61
	t = 3, Determination of Level of Agreement and Preparation Effort	63
	Level of Agreement with Public Ownership ()	63
	Level of Agreement with Private Ownership (?pr)	64
	t = 2, Investors’ Liquidity Needs	64
	t = 1, Managers’ Optimal Choice of Search Effort	64
	Public Ownership	64
	Private Ownership	66
	t = 0, Choice of Managerial Autonomy Under Public (?pub) and Private Ownership (?pr)	67
	Public Ownership	67
	Private Ownership	69
	The Choice Between Public and Private Ownership at t = 0	70
	Predictions of the Model and Testable Empirical Implications: A Summary	72
	Model Extensions: The Impact of Firm Age on the Decision to Go Private	77
	1.4.6 Listing Requirements and Costs	80
	1.4.7 Stock Market Myopia and Short-Termism	85
	1.4.8 The Use of Derivatives	87
	1.4.9 Takeover Defense	88
	1.4.10 Agency Considerations and Leveraged Buyout	88
	1.4.11 PTP Transactions When the Ownership Structure Is Highly Concentrated	90
	References	91
	Chapter 2: Leveraged Buyouts, Going Dark and the Change of the Trading Venue	99
	2.1 Leveraged Buyouts: Introduction	99
	2.2 Origin, Trends, and Characteristics	100
	2.3 The Costs and Benefits of LBOs	110
	2.3.1 Improved Agency Relationships	111
	2.3.2 Tax Benefits	113
	2.3.3 Redistribution Theories	115
	2.3.4 Asymmetric Information and Undervaluation	117
	2.4 Going Dark: Mechanisms and Motivations	118
	2.4.1 Motives	119
	2.5 The Choice to Move from Main Markets to Second Markets	121
	References	122
	Chapter 3: The Decision to Delist: International Empirical Evidence	126
	3.1 Introduction	126
	3.2 Methodological Aspects	128
	3.3 Determinants of Voluntary Delisting	135
	3.3.1 Free Cash Flow	135
	3.3.2 Diversification	143
	3.3.3 Level of Competition and Growth Opportunities	143
	3.3.4 Leverage and Financial Risk	145
	3.3.5 Company Size	145
	3.3.6 Previous Performance	146
	3.3.7 Company Age	147
	3.3.8 Taxation	148
	3.3.9 Corporate Governance Quality	148
	3.3.10 The Presence of Institutional Investors	149
	3.3.11 Analyst Coverage	149
	3.3.12 Insider Ownership and Ownership Concentration	150
	3.3.13 Speculation	151
	3.3.14 External Financial Needs	151
	3.3.15 Liquidity	151
	3.4 Reasons for Involuntary Delisting	152
	3.4.1 Performance	152
	3.4.2 Regulation and Violation of Minimum Requirements	155
	3.5 Effect of Delisting on Shareholders’ Wealth	157
	References	161
	Chapter 4: Voluntary Delisting and Agency Costs: The Case of the London Stock Exchange	165
	4.1 Introduction	165
	4.2 Literature Review	166
	4.3 Data and Methodology	171
	4.4 Results	174
	4.5 Conclusions	177
	References	178
	Index	181