Undervaluation, private information, agency costs and the decision to go private

Uncertain private benefits and the decision to go public

This paper focuses on the decision to go public when both seller and potential buyers have private benefits of control. The basic model by Zingales (1995) is extended to account for uncertainty of private benefits. This leads to new implications for the sales process, ownership structure, measurement of private benefits and the efficiency of takeover regimes. The optimal way to sell the company...

The Dividend Policies of Private Firms: Insights into Smoothing, Agency Costs, and Information Asymmetry

We compare the dividend policies of privatelyand publicly-held firms in order to examine Lintner’s (1956) model of dividends, as wells as more recent agency-based and informationbased explanations of observed dividend behavior. Our findings suggest that both public and private firms exhibit a strong aversion to dividend cuts and omissions; however, public firms adhere to a consistent policy of ...

Dividend Smoothing, Agency Costs, and Information Asymmetry: Lessons from the Dividend Policies of Private Firms

Exploring the Effects of Managerial Ownership on the Decision to Go private: A Behavioral Agency Model Approach

This paper utilizes the behavioral agency model to investigate why many formerly public companies have been converted to privately held corporations. Using a matched pairs sample and categorical binary regression, and controlling for effects found in previous studies, we explore how the equity ownership of those entrusted to manage firms, the firms’ executives, might affect their perceptions of...

The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public

From the viewpoint of a company’s controlling shareholder, the optimal ownership structure generally involves some measure of dispersion, to avoid excessive monitoring by other shareholders. The optimal dispersion of share ownership can be achieved by going public, but this choice also entails some costs (the cost of listing and the loss of control over the shareholder register). If the control...