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Delistings, Controlling Shareholders and Firm Performance in Europe


  • We thank two anonymous referees; John Doukas; Lorenzo Caprio; Kang Hyoung Goo; Taro Niggemann; Melissa Toffanin; and participants at the 2010 FMA European Meeting in Hamburg; the 2010 EFMA Meeting in Aarhus; the 2011 FMA European Meeting in Porto; and the 2011 ADEIMF Meeting in Novara for their comments and suggestions. We also thank Francesca Fariello of Bureau Van Dijk for kindly providing us some of the data used in this study. We are grateful to the Italian Ministry of Research and Higher Education for financial support for this project (PRIN 2008 – Research 610 Number 20082R4ZKJ). Correspondence: Ettore Croci.


Using a novel European data set, we investigate the role of controlling shareholders in delisting decisions. Minority shareholders earn lower abnormal returns when the controlling shareholder takes the company private, but this lower premium disappears when we control for the firm's characteristics. After the delisting, firms delisted by their controlling shareholders do not improve their operating performance. These results do not suggest that controlling shareholders expropriate minority investors with minority freeze-outs. Our findings are not due to heterogeneity across controlling shareholders. In fact, when we focus on family controlling shareholders, we find no evidence of performance improvement after the delisting.

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