Document Type
Article
Publication Date
2015
Keywords
going private, private equity, valuation
Abstract
Undervaluation is often offered as an important consideration in private equity transactions. This study analyzes the importance of undervaluation, vis-à-vis information asymmetry, as a determining factor in ‘going-private’ transactions in Australia. Using a matched sample of firms from 1990 to 2012, we test a predictive choice model. The empirical results show that market undervaluation is a dominant factor in private equity takeovers. These results are robust to alternative measures of valuation, prevailing market conditions, money flows and subperiods.
Faculty
Pilon School of Business
Journal
Australian Journal of Management
Volume
41
Issue
4
First Page
735
Last Page
759
Version
Publisher's version
Terms of Use
Terms of Use for Works posted in SOURCE.
Copyright
© Subhrendu Rath, Mamunur Rashid
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Original Publication Citation
Rath, S. & Rashid, M. (2016). Undervaluation and private equity takeovers. Australian Journal of Management, 41(4), 735-759. doi: 10.1177/0312896215594465
SOURCE Citation
Rath, Subhrendu and Rashid, Mamunur, "Undervaluation and Private Equity Takeovers" (2015). Publications and Scholarship. 20.
https://source.sheridancollege.ca/pilon_publ/20