The firm lifecycle as a determiant of going private decisions

  • Robert Gutsche University of St. Gallen
  • Lucia Schroeter University of Dubai
Keywords: going private, public to private, voluntary delistings, corporate lifecycle

Abstract

We examine the impact of corporate lifecycle on the likelihood of becoming a voluntary going private firm. We apply the firm’s capital mix as a measure for the stage in a firm’s lifecycle. In doing so, we provide a framework and evidence on firm characteristics of going private firms. We find that the decision to go private depends on the firm’s lifecycle. Young firms, with low retained earnings are more likely to go private than mature or old firms. We also find that relative firm characteristics of going private and non-going private firms are consistent with the findings on relative firm characteristics in M & A activity research for acquirers (bidders, non-targets) vs. non-acquirer (non-bidders, and targets) and that these relative firm characteristics of going private and non-going private firms stay constant throughout all stages of the corporate lifecycle.

Keywords : going private, public to private, voluntary delistings, corporate lifecycle

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Published
2017-12-24