Private Equity Acquisitions of Continental European Firms: The Impact of Ownership and Control on the Likelihood of Being Taken Private

European Financial Management

Volumn 19, Issue 1, 2013, Pages 72-107

  Achleitner, Ann Kristin ^a   Betzer, André ^b   Goergen, Marc ^c   Hinterramskogler, Bastian ^d  

^a TUM SCHOOL OF MANAGEMENT   (Germany)

^b UNIVERSITY OF WUPPERTAL   (Germany)

^c CARDIFF UNIVERSITY   (United Kingdom)

^d TECHNICAL UNIVERSITY OF MUNICH   (Germany)

Author keywords

Continental Europe; G34; Going private; Ownership; Private equity

Indexed keywords

EID: 85028115706     PISSN: 13547798     EISSN: 1468036X     Source Type: Journal    
DOI: 10.1002/eufm.569     Document Type: Article

References (63)

1. Achleitner A.-K., Andres C., Betzer A. and Weir C., 'Wealth effects of private equity investments on the German stock market', European Journal of Finance, forthcoming 2010.
2. Achleitner A.-K. and Hinterramskogler B., 'Private equity and wealth effects in blockholder-based governance regimes', Working Paper (TUM Business School, 2008).
3. Agarwal R. and Elston J. A., 'Bank-firm relationships, financing and firm performance in Germany', Economics Letters, 72, 2001, pp. 225-32.
4. Andres C., Betzer A. and Weir C., 'Shareholder wealth gains through better corporate governance - the case of European LBO-transactions', Financial Markets and Portfolio Management, 21, 2007, pp. 403-24.
5. Andres C., 'Large shareholders and firm performance - an empirical examination of founding-family ownership', Journal of Corporate Finance, 14, 2008, pp. 431-45.
6. Axelson U., Jenkinson T., Stromberg P. and Weisbach M. S., 'Borrow cheap, buy high? The determinants of leverage and pricing in buyouts', Working Paper (National Bureau of Economic Research, 2010).
7. Banerjee S., Leleux B. and Vermaelen T., 'Large shareholders and corporate control: an analysis of stake purchases by French holding companies', European Financial Management, 3, 1997, pp. 23-43.
8. Barclay M. J. and Holderness C. G., 'Private benefits from control of public corporations', Journal of Financial Economics, 25, 1989, pp. 371-95.
9. Bebchuk L. A., 'A rent-protection theory of corporate ownership and control', Working Paper (National Bureau of Economic Research, 1999).
10. Boot A. W. A., Gopalan R. and Thakor A. V., 'Market liquidity, investor participation, and managerial autonomy: why do firms go private?' Journal of Finance, 63, 2008, pp. 2013-59.
11. Cable J., 'Capital market information and industrial performance: the role of West German banks', Economic Journal, 95, 1985, pp. 118-32.
12. Chirinko R. and Elston J. A., 'Finance, control, and profitability: An evaluation of German bank influence', Working Paper No. 28 (American Institute for Contemporary German Studies, 1998).
13. Claessens S., Djankov S., Fan J. P. H. and Lang L. H. P., 'Disentangling the incentive and entrenchment effects of large shareholdings', Journal of Finance, 57, 2002, pp. 2741-71.
14. Connelly B. L., Hoskisson R. E., Tihanyi L., and Certo S. T., 'Ownership as a form of corporate governance', forthcoming Journal of Management Studies, 2010.
15. Croci E., 'Corporate raiders, performance and governance in Europe', European Financial Management, 13, 2007, pp. 949-78.
16. Cumming D., Siegel D. S. and Wright M., 'Private equity, leveraged buyouts and governance', Journal of Corporate Finance, 13, 2007, pp. 439-60.
17. Cumming D. and Zambelli S., 'Illegal buyouts', Journal of Banking & Finance, 34, 2010, pp. 441-56.
18. Drobetz W., Schillhofer A. and Zimmermann H., 'Corporate governance and expected stock returns: evidence from Germany', European Financial Management, 10, 2004, pp. 267-93.
19. Dyck A. and Zingales L., 'Private benefits of control: an international comparison', Journal of Finance, 59, 2004, pp. 537-600.
20. Edwards J. and Nibler N., 'Corporate governance in Germany: the role of banks and ownership concentration', Economic Policy, 31, 2000, pp. 239-67.
21. Emmons W. R. and Schmid F. A., 'Universal banking, allocation of control rights, and corporate finance in Germany', Working Paper 1998-001 A (Federal Reserve Bank of St. Louis, 1998).
22. Faccio M. and Lang L. H. P., 'The ultimate ownership of Western European corporations', Journal of Financial Economics, 65, 2002, pp. 365-95.
23. Franks J. R., Mayer C., Volpin P. F. and Wagner H. F., 'Evolution of family capitalism: a comparative study of France, Germany, Italy and the UK', Working Paper (2009).
24. Geranio M. and Zanotti G., 'Equity markets do not fit all: an analysis of public-to-private deals in continental Europe', European Financial Management, forthcoming 2010.
25. Gorton G. and Schmid F., 'Universal banking and the performance of German firms', Journal of Financial Economics, 58, 2000a, pp. 29-80.
26. Gorton G. and Schmid F., 'Class struggle inside the firm: a study of German codetermination', Working Paper 200-025B (Federal Reserve Bank of St. Louis, 2000b).
27. Grossman S. J. and Hart O. D., 'One Share-One Vote and the Market for Corporate Control', Journal of Financial Economics, 20, 1988, pp. 175-202.
28. Halpern P., Kieschnick R. and Rotenberg W., 'On the heterogeneity of leveraged going private transactions', Review of Financial Studies, 12, 1999, pp. 281-309.
29. Januszewski S. I., Köke J. and Winter J. K., 'Product market competition, corporate governance and firm performance: an empirical analysis for Germany', Research in Economics, 56, 2002, pp. 299-332.
30. Jensen M. C., 'Agency costs of free cash flow, corporate finance and takeovers', American Economic Review, 76, 1986, pp. 323-29.
31. Jensen M. C., 'The modern industrial revolution, exit, and the failure of internal control systems', Journal of Finance, 48, 1993, pp. 831-80.
32. Jensen M. C. and Meckling W. H., 'Theory of the firm: managerial behavior, agency costs and ownership structure', Journal of Financial Economics, 3, 1976, pp. 305-60.
33. Johnson R. A., Schnatterly K., Johnson S. G. and Chiu S.-C., 'Institutional investors and institutional environment: a comparative analysis and review', forthcoming Journal of Management Studies, 2010.
34. Kaplan S. and Strömberg P., 'Leveraged buyouts and private equity', Journal of Economic Perspectives, 23, 2009, pp. 121-46.
35. Kaplan S. N., 'Management buyouts: evidence on taxes as a source of value', Journal of Finance, 44, 1989, pp. 611-32.
36. Kieschnick R. L., 'Free cash flow and stockholder gains in going private transactions revisited', Journal of Business Finance & Accounting, 25, 1998, pp. 187-202.
37. Klein A. and Zur E., 'Entrepreneurial shareholder activism: hedge funds and other private investors', Journal of Finance, 64, 2009, pp. 187-229.
38. Köke J. and Renneboog L., 'Does strong corporate control and intense product market competition lead to stronger productivity growth? Evidence from market-oriented and blockholder-based governance regimes', Journal of Law and Economics, 48, 2005, pp. 475-516.
39. Lehmann E. and Weigand J., 'Does the governed corporation perform better? Governance structures and corporate performance in Germany', European Finance Review, 4, 2000, pp. 157-95.
40. Lehn K. and Poulsen A., 'Free cash flow and stock holder gains in going private transactions', Journal of Finance, 44, 1989, pp. 771-87.
41. Lowenstein L., 'Management buyouts', Columbia Law Review, 85, 1985, pp. 730-84.
42. Malmendier U. and Tate G., 'Who makes acquisitions? CEO overconfidence and the market's reaction', Journal of Financial Economics, 89, 2008, pp. 20-43.
43. Maupin R. J., Bidwell C. M. and Ortegren A. K., 'An empirical investigation of the characteristics of publicly-quoted corporations which change to closely-held ownership through management buyouts', Journal of Business Finance & Accounting, 1, 1984, pp. 435-50.
44. May D. O., 'Do managerial motives influence firm risk reduction strategies?' Journal of Finance, 50, 1995, pp. 1291-1308.
45. McConnell J. J. and Servaes H., 'Additional evidence on equity ownership and corporate value', Journal of Financial Economics, 27, 1990, pp. 595-613.
46. Metrick A. and Yasuda A., 'The economics of private equity funds', forthcoming in Review of Financial Studies, 2010, Available at SSRN: ssrn.com/abstract=996334.
47. Modigliani F. and Miller M. H., 'The cost of capital, corporation finance and the theory of investment', American Economic Review, 48, 1958, pp. 261-97.
48. Modigliani F. and Miller M. H., 'Corporate income taxes and the cost of capital: a correction', American Economic Review, 53, 1963, pp. 433-43.
49. Morck R., Shleifer A. and Vishny R. W., 'Management ownership and market valuation - an empirical analysis', Journal of Financial Economics, 20, 1988, pp. 293-315.
50. North D. S., 'The role of managerial incentives in corporate acquisitions: evidence from the 1990s', Journal of Corporate Finance, 7, 2001, pp. 125-49.
51. Opler T. and Titman S., 'The determinants of leveraged buyout activity: free cash flow vs. financial distress costs', Journal of Finance, 48, 1993, pp. 1985-99.
52. Renneboog L., Simons T. and Wright M., 'Why do public firms go private in the UK? The impact of private equity investors, incentive realignment and undervaluation', Journal of Corporate Finance, 13, 2007, pp. 591-628.
53. Scholich M. and Burton R., 'Private equity trend report 2010: Navigating the rocky road to recovery' (PricewaterhouseCoopers, 2010).
54. Servaes H., 'Do takeover targets overinvest?' Review of Financial Studies, 7, 1994, pp. 253-77.
55. Short H. and Keasey K., 'Managerial ownership and the performance of firms: evidence from the UK', Journal of Corporate Finance, 5, 1999, pp. 79-101.
56. Singh H., 'Management buyouts: distinguishing characteristics and operating changes prior to public offering', Strategic Management Journal, 11, 1990, pp. 111-29.
57. Weir C., Jones P. and Wright M., 'Public to private transactions, private equity and performance in the UK: an empirical analysis of the impact of going private', Working Paper (2008).
58. Weir C., Laing D. and McKnight P. J., 'Internal and external governance mechanisms: their impact on the performance of large UK public companies', Journal of Business Finance & Accounting, 29, 2002, pp. 579-611.
59. Weir C., Laing D. and Wright M., 'Incentive effects, monitoring mechanisms and the market for corporate control: an analysis of the factors affecting public to private transactions in the UK', Journal of Business Finance & Accounting, 32, 2005, pp. 909-43.
60. Weir C., Wright M. and Scholes L., 'Public-to-private buy-outs, distress costs and private equity', Applied Financial Economics, 18, 2008, pp. 801-19.
61. Wright M. and Robbie K., 'Venture capital and private equity: a review and synthesis', Journal of Business Finance & Accounting, 25, 1998, pp. 521-70.
62. Wright M., Weir C. and Burrows A., 'Irrevocable commitments, going private and private equity', European Financial Management, 13, 2007, pp. 757-75.
63. Zingales L., 'The value of the voting right: a study of the Milan Stock Exchange experience', Review of Financial Studies, 7, 1994, pp. 125-48.