Financial Visibility and the Decision to Go Private

Posted: 1 Feb 2010

See all articles by Hamid Mehran

Hamid Mehran

Independent

Stavros Peristiani

Federal Reserve Bank of New York--Retired

Multiple version iconThere are 3 versions of this paper

Date Written: May 2009

Abstract

A large fraction of the companies that went private between 1990 and 2007 were fairly young public firms, often with the same management team making the crucial restructuring decisions at both the time of the initial public offering (IPO) and the buyout. This article investigates the determinants of the decision to go private over a firm's entire public life cycle. Our evidence reveals that firms with declining growth in analyst coverage, falling institutional ownership, and low stock turnover were more likely to go private and opted to do so sooner. We argue that a primary reason behind the decision of IPO firms to abandon their public listing was a failure to attract a critical mass of financial visibility and investor interest.

Keywords: G34

Suggested Citation

Mehran, Hamid and Peristiani, Stavros, Financial Visibility and the Decision to Go Private (May 2009). The Review of Financial Studies, Vol. 23, Issue 2, pp. 519-547, 2009, Available at SSRN: https://ssrn.com/abstract=1544157 or http://dx.doi.org/hhp044

Hamid Mehran

Independent ( email )

Stavros Peristiani

Federal Reserve Bank of New York--Retired ( email )

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