Do insiders time management buyouts and freezeouts to buy undervalued targets?

• 成果类型: Article
• 署名作者: Harford, Jarrad; Stanfield, Jared; Zhang, Feng
• 署名单位: University of Washington; University of Washington Seattle; University of New South Wales Sydney; Utah System of Higher Education; University of Utah
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.12.010
• 发表日期: 2019
• 页码: 206-231
• 关键词: management buyouts; Freezeout acquisitions; Market timing; Conflicts of interest

摘要

We provide evidence that managers and controlling shareholders time management buyouts (MBOs) and freezeout transactions to take advantage of industry-wide undervaluation. Portfolios of industry peers of MBO and freezeout targets show significant alphas of around 1% per month over the 12-month period following the transaction. These returns are not explained by a battery of risk factors or empirical methodologies, but exhibit significant heterogeneity across deals. Additional tests show that, on average, abnormal returns to industry peers are a reliable proxy for those to the target firm. Further, MBOs and freezeouts are announced during troughs of industry profitability. Published by Elsevier B.V.