Do going-private transactions affect plant efficiency and investment?

Sreedhar Bharath, Amy Dittmar, Jagadeesh Sivadasan

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

We examine whether constraints on public firms affect firms' efficiency by testing if going private improves plant-level productivity relative to peer control groups. We find that, despite increases in productivity after going private, there is little evidence of efficiency gains relative to peer groups of plants constructed to control for industry, age, size, past productivity, and the endogeneity of the going-private decision. Going-private firms do extensively restructure their portfolio of plants, selling and closing plants more quickly than others. Our findings cast doubt on the view that public markets cause listed firms to operate plants less efficiently due to overinvestment but indicate that going private increases restructuring activity.

Original languageEnglish (US)
Pages (from-to)1929-1976
Number of pages48
JournalReview of Financial Studies
Volume27
Issue number7
DOIs
StatePublished - 2014

Fingerprint

Going private
Productivity
Public firm
Overinvestment
Peers
Testing
Endogeneity
Private firms
Peer group
Efficiency gains
Industry
Firm efficiency
Plant closings

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Do going-private transactions affect plant efficiency and investment? / Bharath, Sreedhar; Dittmar, Amy; Sivadasan, Jagadeesh.

In: Review of Financial Studies, Vol. 27, No. 7, 2014, p. 1929-1976.

Research output: Contribution to journalArticle

Bharath, Sreedhar ; Dittmar, Amy ; Sivadasan, Jagadeesh. / Do going-private transactions affect plant efficiency and investment?. In: Review of Financial Studies. 2014 ; Vol. 27, No. 7. pp. 1929-1976.
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