One of the reasons why a firm chooses to go private is the significant amount of cash flows which can exacerbate agency costs: this can indicate poor growth opportuni- ties and make external resources less required. In line with both knowledge economy and financial literature, the paper aims to indagate the relationship between agency costs, firm’s performance, and delisting. Despite there is evidence in finance that highlights the role of exchange regulators in the going private processes, just few studies focus on the voluntary delisting and its antecedents. Starting from the knowl- edge economy setting, this paper aims to define how firm’s financial performance moderates the relationship between agency costs and delisting choices. Based on a sample of non-financial firms delisted from the most important European stock mar- kets between 1997 and 2017, we applied an OLS regression to analyze the main var- iables that influence the going private processes. We find that a high level of stock market performance, associated with high level of free cash flows, promotes going private as a means of anticipating and preventing future value decreases. Finally, the paper provides practical implications for the development of new approach of delist- ing choice.

Magni, D., Morresi, O., Pezzi, A., Graziano, D. (2022). Defining the Relationship Between Firm’s Performance and Delisting: Empirical Evidence of Going Private in Europe. JOURNAL OF THE KNOWLEDGE ECONOMY, 13(3) [10.1007/s13132-021-00806-w].

Defining the Relationship Between Firm’s Performance and Delisting: Empirical Evidence of Going Private in Europe

Magni, D.
;
Morresi, O.;Pezzi, A.;
2022-01-01

Abstract

One of the reasons why a firm chooses to go private is the significant amount of cash flows which can exacerbate agency costs: this can indicate poor growth opportuni- ties and make external resources less required. In line with both knowledge economy and financial literature, the paper aims to indagate the relationship between agency costs, firm’s performance, and delisting. Despite there is evidence in finance that highlights the role of exchange regulators in the going private processes, just few studies focus on the voluntary delisting and its antecedents. Starting from the knowl- edge economy setting, this paper aims to define how firm’s financial performance moderates the relationship between agency costs and delisting choices. Based on a sample of non-financial firms delisted from the most important European stock mar- kets between 1997 and 2017, we applied an OLS regression to analyze the main var- iables that influence the going private processes. We find that a high level of stock market performance, associated with high level of free cash flows, promotes going private as a means of anticipating and preventing future value decreases. Finally, the paper provides practical implications for the development of new approach of delist- ing choice.
Magni, D., Morresi, O., Pezzi, A., Graziano, D. (2022). Defining the Relationship Between Firm’s Performance and Delisting: Empirical Evidence of Going Private in Europe. JOURNAL OF THE KNOWLEDGE ECONOMY, 13(3) [10.1007/s13132-021-00806-w].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11590/388951
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