IDEAS home Printed from https://ideas.repec.org/a/fma/fmanag/denis92.html
   My bibliography  Save this article

Corporate Investment Decisions and Corporate Control: Evidence From Going-Private Transactions

Author

Listed:
  • David J. Denis

Abstract

The investment decisions of firms over a five-year period immediately prior to being taken private are examined. The results indicate that announcements of new investments made by going-private candidates are characterized by significant negative median abnormal returns. These findings appear to be driven largely by the subsample of contested transactions. For this subsample and its control group, the likelihood of becoming a buyout candidate is significantly inversely related to the wealth effects of the firm's investment decisions. Overall, the results suggest that one source of value in going-private transactions, particularly contested transactions, is the reduction of agency costs observed in the form of poor investment decisions.

Suggested Citation

  • David J. Denis, 1992. "Corporate Investment Decisions and Corporate Control: Evidence From Going-Private Transactions," Financial Management, Financial Management Association, vol. 21(3), Fall.
    • Handle: RePEc:fma:fmanag:denis92
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Metrick & Ayako Yasuda, 2011. "Venture Capital and Other Private Equity: a Survey," European Financial Management, European Financial Management Association, vol. 17(4), pages 619-654, September.
    2. Walter, Andreas & Eisele, Florian, 2003. "Kurswertreaktionen auf die Ankündigung von Going Private : Transaktionen am deutschen Kapitalmarkt," Tübinger Diskussionsbeiträge 274, University of Tübingen, School of Business and Economics.
    3. Florian Eisele & Andreas Walter, 2006. "Kursreaktionen auf die Ankündigung von Going Private-Transaktionen am deutschen Kapitalmarkt," Schmalenbach Journal of Business Research, Springer, vol. 58(3), pages 337-362, May.
    4. Phillippe Desbrières & Alain Schatt, 2002. "The Impacts of LBOs on the Performance of Acquired Firms: The French Case," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(5‐6), pages 695-729.
    5. Oskar Kowalewski & Krzysztof Jackowicz, 2005. "Why Companies Go Private in Emerging Markets? Evidence from Poland," Finance 0511013, University Library of Munich, Germany.
    6. Florian Eisele & Andreas Walter, 2006. "Motive für den Rückzug von der Börse — Ergebnisse einer Befragung deutscher Going Private-Unternehmen," Schmalenbach Journal of Business Research, Springer, vol. 58(6), pages 807-833, September.
    7. James Brau & J. Carpenter & Mauricio Rodriguez & C. Sirmans, 2013. "REIT Going Private Decisions," The Journal of Real Estate Finance and Economics, Springer, vol. 46(1), pages 24-43, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fma:fmanag:denis92. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Courtney Connors (email available below). General contact details of provider: https://edirc.repec.org/data/fmaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.