What motivates going private?

an analysis of Australian firms

Peter H. Eddey, Kin Wai Lee, Stephen L. Taylor

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

We investigate going private transactions in Australia between 1988 and 1991. Approximately ten percent of all takeovers during this period are instances of going private. In contrast to studies of similar transactions in the United States, we find no direct evidence to support a free cash flow explanation for going private, although going private is frequently preceded by the threat of a takeover offer. However, the free cash flow explanation for going private may not be applicable in Pacific Basin countries where exchange-traded investment activity is in relatively high growth sectors and foreign ownership accounts for a large part of those investment sectors where managerial abuse of free cash flow has been alleged.

Original languageEnglish
Pages (from-to)31-50
Number of pages20
JournalAccounting and Finance
Volume36
Issue number1
DOIs
Publication statusPublished - May 1996

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