The Effects of Corporate Governance on the Likelihood of a Corporation Being Acquired, Going Private, or Going Bankrupt

This chapter examines, from a traditional perspective, several areas where the Securities and Exchange Commission (SEC) has impacted corporate governance in a meaningful way. By way of example, these subjects include insider trading, qualitative materiality, the role of gatekeepers (such as outside directors, attorneys, and accountants), the Commission’s use of disclosure to influence conduct, the implementation by subject companies of undertakings pursuant to SEC enforcement proceedings, and mergers and acquisitions (including tender offers and going-private transactions). This chapter’s focus is on the manner in which the SEC for well over 50 years has impacted corporate governance by means of exercising its rule-making and oversight authority.

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Factors influencing the going private decision - a Hazard model approach

Corporate Ownership and Control ◽

10.22495/cocv13i2c3p4 ◽

2016 ◽

Vol 13 (2) ◽

pp. 532-545

Author(s):

Lucia Ehn

Keyword(s):

Corporate Governance ◽

Research Question ◽

Hazard Model ◽

Private Companies ◽

Going Private ◽

Factors Influencing ◽

Logistic Regressions ◽

Cox Hazard Model ◽

Model Approach

The aim of this paper is to characterize companies which voluntarily changed their ownership from public to private. The research question addressed in this paper is, if it is possible to characterize going private companies in earlier stages than just shortly before the announcement of their step into privacy. I therefore examine going private companies in a lifecycle context with Cox hazard model and conduct additional logistic regressions at the time of the IPO and shortly before delisting. Further, I not only focus on companies’ fundamentals, but also on perceptibility and corporate governance variables. With data of 1’184 US IPOs from 1990 to 2013, my results show that both, perceptibility and corporate governance variables accelerate the going private decision.

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