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Author Achleitner, Ann-Kristin ♦ Andres, Christian ♦ Betzer, André ♦ Weir, Charlie
Source EconStor
Content type Text
Publisher Center for Entrepreneurial and Financial Studies (CEFS)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword Private Equity ♦ Corporate Governance ♦ Agency Theory ♦ Event Study ♦ Private Equity ♦ Corporate Governance ♦ Prinzipal-Agent-Theorie ♦ Aktiengesellschaft ♦ Deutschland ♦ Information and Market Efficiency; Event Studies; Insider Trading ♦ Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ♦ Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Abstract This paper investigates the wealth effects of private equity (PE) investor purchases of shares in German quoted companies. It is the first study to analyze these effects for the German market which is particularly interesting due to its distinct characteristics with regard to the ownership structure of publicly listed companies and the protection of minority shareholders. We find that PE investors generate positive wealth effects for target shareholders of 5.90% around the event day (t = -1 to t = 0). In addition, we find that the wealth effects of PE investor involvement in Germany are positively related to the target's tax liabilities and degree of undervaluation and negatively related to the target's leverage and the shareholding of the second largest ownership block. The latter effect can be interpreted as a supplementary monitoring effect of the management or a monitoring effect of the largest shareholder through which private benefits of control are reduced.
Part of series CEFS working paper series x2008-05
Learning Resource Type Article
Publisher Date 2008-01-01
Publisher Place Munich
Rights Holder