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The Intra‐Industry Effects of Going‐Private Transactions
Author(s) -
SLOVIN MYRON B.,
SUSHKA MARIE E.,
BENDECK YVETTE M.
Publication year - 1991
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1991.tb04630.x
Subject(s) - valuation (finance) , valuation effects , consolidation (business) , business , monopoly , industrial organization , monetary economics , economics , microeconomics , finance
We demonstrate that bids to take firms private generate significantly positive valuation effects for industry rivals of target firms. These valuation effects cannot reflect either synergy or monopoly since no consolidation of operating firms is involved in such transactions. Participation by buyout specialists in the bid does not significantly affect these gains. Bids by outsiders and bids by incumbent managers generate similar valuation effects for industry rivals. The effect on share prices of industry rivals is inversely related to the capitalized values of rival firms relative to the target firm. We also report valuation effects for target firms.