Post-Delisting Performance of Voluntary Privatized Companies

Abstract

We analyze active owners’ ability to realize incentives that motivate voluntary delisting of firms. Reduced agency and regulatory costs and an increased tax shield are primary motivational factors that should improve a firm’s post-delisting performance. The transparency within the Norwegian market allowed us to analyze historic time trends for firms from their public to private state.We explore and test the treatment effects on the treated using an inverse probability of treatment weighted model. Our sample showed significant financial improvement after going private. ROCE, ROA, and ROE all increase as firms concentrated their ownership. Therefore, we believe that there is substantial support for delisting a firm if it cannot capture the benefits of being publicly traded.