Date of Award

1997

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Finance (Business Administration)

First Advisor

George M. Frankfurter

Abstract

The commonly understood and traditional forms of termination for a public firm are the takeover and bankruptcy. "Going private" is a new and interesting third alternative. Once the "going public" option--a significant number of observed reverse leveraged buyout (LBO) cases--is taken into account, however, the fundamental difference between this new alternative and traditional ways becomes apparent. Even more fascinating than the "public-to-private private-to-public" move is the fact that some companies go private again. This dissertation examines the phenomenon of re-LBOs; that is, the practice of going private via management buyout, then reobtaining public status through a new initial public offering, and then going private a second time. The dissertation encompasses various dimensions that should, in addition to explaining re-LBOs, provide new evidence for existing theories of going-private transactions. First, the dissertation investigates the applicability of the leading theoretical and empirical issues of LBOS to a re-LBO sample, thus providing a comparative analysis of LBOs and re-LBOs. Specifically, it challenges the free cash flow argument of LBOS by replicating the Lehn and Poulsen (1989) study of going-private transactions with the re-LBO sample. Second, the dissertation proposes an information asymmetry hypothesis to going-private transactions. This part of the dissertation reports the results of a survey of the views of management in 600 LBOS. The results of the survey are substantiated by tests of a set of hypotheses that exploit either reverse LBO or re-LBO samples to provide additional statistical evidence on the information asymmetry issue. Although reverse LBOs have been examined in the finance literature to some degree, the use of re-LBO firms to study management buyouts is original.

ISBN

9780591458923

Pages

141

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