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===Annotated===
====Weir 2005====
@article{weir_incentive_2005,
title = {Incentive {Effects}, {Monitoring} {Mechanisms} and the {Market} for {Corporate} {Control}: {An} {Analysis} of the {Factors} {Affecting} {Public} to {Private} {Transactions} in the {UK}},
volume = {32},
issn = {1468-5957},
shorttitle = {Incentive {Effects}, {Monitoring} {Mechanisms} and the {Market} for {Corporate} {Control}},
url = {http://onlinelibrary.wiley.com/doi/10.1111/j.0306-686X.2005.00617.x/abstract},
doi = {10.1111/j.0306-686X.2005.00617.x},
abstract = {Abstract: This paper investigates the factors that influence the decision to change the status of a publicly quoted company to that of a private company. We find that firms that go private are more likely to have higher CEO ownership and higher institutional ownership. In relation to their board structures, firms going private tend to have more duality but there is no statistical difference in the proportion of non-executive directors. They do not show signs of having excess free cash flows but there is some evidence of lower growth opportunities. We do not find that firms going private experience a greater threat of hostile acquisition. The results are therefore consistent with incentive and monitoring explanations of going private. Calculation of the probability of going private shows that incentive effects are stronger than the monitoring effects.},
language = {en},
number = {5-6},
urldate = {2016-06-17},
journal = {Journal of Business Finance \& Accounting},
author = {Weir, Charlie and Laing, David and Wright, Mike},
month = jun,
year = {2005},
keywords = {incentives, market for corporate control, monitoring, public to private transactions},
pages = {909--943},
file = {Weir et al (2005) - Factors affecting Public to Private in UK.pdf}
}
Considers public to private transitions of non-financial firms in UK (1998-2000) compared to matched controls (by size and industry). This includes management buyouts as well as LBOs. Finds the following relations:
*US and UK PTPs have different causes, probably due to tax differences with respect to debt versus equity financing.
*Identifies three hypotheses: market for corporate control, incentive alignment, and monitoring.
**Market for corporate control: Free cash control, threat of takeover insignificant
**Incentive alignment, monitoring: Higher CEO shareholdings, higher institutional shareholdings, more duality, lower Q ratios significantly related to higher chance of PTP
Variables:
*percentage non-executive directors
*percentage independent directors
*duality of CEO and chairman
*percentage of shares held by CEO
*percentage of shares held by non-CEO executive directors
*percentage of shares held by institutions
*free cash flow (operating cash flow minus interest, tax, dividends, deflated by sales) (cf. Kieschnick (1998) and Halpern et al. (1999)
*speculation of takeover in financial press
*Q ratio
====Opler and Titman 1993====
@article{opler_determinants_1993,
title = {The {Determinants} of {Leveraged} {Buyout} {Activity}: {Free} {Cash} {Flow} vs. {Financial} {Distress} {Costs}},
volume = {48},
issn = {00221082},
shorttitle = {The {Determinants} of {Leveraged} {Buyout} {Activity}},
url = {http://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=0322636&site=ehost-live&scope=site},
doi = {10.1111/%28ISSN%291540-6261/issues},
abstract = {This paper investigates the determinants of leveraged buyout activity by comparing firms that have implemented leveraged buyouts to those that have not. Consistent with the free cash flow theory, the authors find that firms that initiate leveraged buyouts can be characterized as having a combination of unfavorable investment opportunities (low Tobin's q) and relatively high cash flow. Leveraged buyout firms also tend to be more diversified than firms that do not undertake leveraged buyouts. In addition, firms with high expected costs of financial distress (e.g, those with high research and development expenditures) are less likely to do leveraged buyouts.},
number = {5},
urldate = {2016-06-17},
journal = {Journal of Finance},
author = {Opler, Tim and Titman, Sheridan},
month = dec,
year = {1993},
keywords = {Capital and Ownership Structure, Financial Risk and Risk Management, Financing Policy, Goodwill G32, Value of Firms},
pages = {1985--1999},
file = {Opler and Titman (1993) - Determinants of LBO activity.pdf}
}
Opler and Titman find support for the free cash flow theory and financial distress hypothesis. They also find that firms undergoing LBOs in the 1985 to 1990 subperiod were more diversified than those that did not.
Regression: Logit of Probability of Going Private (1980 to 1990):
*Operating income/assets
*Tobin's Q
*Machinery industry dummy
*R&D/sales
*Selling expenses/sales
*Log(assets)
*Diversification index
*High cash flow, low Q
*Low cash flow, high q
*Diversified, low q
→Annotated
==James==
=Unsorted=
