Delistings, Controlling Shareholders and Firm Performance in Europe

Ettore Croci · Alfonso Del Giudice

48 citations0/0 files storedEuropean Financial Management

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Corporate Finance and Governance Financial Markets and Investment Strategies Family Business Performance and Succession

Abstract

Abstract Using a novel European data set, we investigate the role of controlling shareholders in delisting decisions. Minority shareholders earn lower abnormal returns when the controlling shareholder takes the company private, but this lower premium disappears when we control for the firm's characteristics. After the delisting, firms delisted by their controlling shareholders do not improve their operating performance. These results do not suggest that controlling shareholders expropriate minority investors with minority freeze‐outs. Our findings are not due to heterogeneity across controlling shareholders. In fact, when we focus on family controlling shareholders, we find no evidence of performance improvement after the delisting.

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References

1998Law and Finance 1986Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers 1997A Survey of Corporate Governance 1999Corporate Ownership Around the World 1993The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems 2003Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500 2002The ultimate ownership of Western European corporations 2008The law and economics of self-dealing

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2017Going private: A socioemotional wealth perspective on why family controlled companies decide to leave the stock-exchange 2013Delistings and the costs of governance: a study of European stock exchanges 1996–2004 2019Owners’ Portfolio Diversification and Firm Investment 2013The role of institutional investors in public-to-private transactions

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