We investigate the monitoring role of private equity investors by examining theeffect of private equity investors in partial acquisitions market for the 1986-2002 period. Partial acquisitions account for 29.54% of the market for corporate control while majority control block acquisitions and full acquisitions account for 4.86% and 65.60%, respectively. We find that private equity investors dominate the partial acquisitions market and account for most of shareholder activism. The three-day cumulative abnormal return (CAR) on partial acquisitions by all private equity investors for the entire sample period is 6.26%. The three-day CAR on partial acquisitions by activist private equity investors for the 1997-2000 subperiod is 18.51% showing a significant economic effect of the activist private equity investors on the target firm governance. Activist private equity investors are more likely to obtain a board representation. While most activist private equity investors stay with target firms at least for a year, some activist private equity investors close their position within a year via takeover. The takeover anticipation effects appear to be present in the positive market reaction to partial acquisitions by private equity investors. Underleveraged targets are more likely to be taken over in a year. Furthermore, the market reaction to partial acquisitions by activist private equity investors is particularly large when there is no previous outside block.
Key words: private equity investors, partial acquisitions, shareholder activism, target firm governance, large shareholder monitoring
JEL classification: G34
학회소식
공지사항
[2011년 제 4차] Private Equity Investors as Monitors: Evidence from
작성자 : 관리자
조회수 : 967
게시일 :
2011-12-05