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The hidden costs of being public: Evidence from multinational firms operating in an emerging market

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  • Slutzky, Pablo

Abstract

I study how firms deal with business regulations that limit their operations. I first show that the ownership structure of a firm affects its degree of compliance with regulations, with publicly listed firms complying more than privately held ones. This differential compliance imposes a burden on listed firms that helps explain mergers and acquisitions patterns. When regulatory levels increase, private firms acquire listed ones and listed firms stop acquiring private ones. These results uncover an additional cost faced by listed companies, identify a new driver of M&A transactions, and show that high levels of regulation lead to opaque corporate structures.

Suggested Citation

  • Slutzky, Pablo, 2021. "The hidden costs of being public: Evidence from multinational firms operating in an emerging market," Journal of Financial Economics, Elsevier, vol. 139(2), pages 606-626.
    • Handle: RePEc:eee:jfinec:v:139:y:2021:i:2:p:606-626
    DOI: 10.1016/j.jfineco.2020.08.001
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    More about this item

    Keywords

    Mergers and acquisitions; Stock market listing; Ownership structure;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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