Going private transactions performance in emerging economies: a comparative study in Latin America and Asia

ABSTRACT

We extend our worldwide research on private equity by studying the drivers of going private operating performance in emerging countries (Asia and Latin America). We select a large set of candidate drivers (financial, governance, macroeconomics, microeconomics, institutional variables) and we analyze their effects on performance over the short and long terms. To conduct our study, we use Capital IQ, Thomson One Banker, World Bank as databases. We contribute to the current literature by doing an investigation of the impact of macroeconomics factors and institutional drivers (political stability, rule of law and regulatory quality) on the buyout performance. Positive and significance results are obtained. We use a sample of 248 going private transactions, which occurred between 2000 and 2011. Our results show that GDP growth and political stability are important drivers that significantly contribute to generate performance in going private.

KEYWORDS:

• Emerging countries
• going private
• delisting
• drivers
• institutional drivers
• macroeconomics variables

Acknowledgments

We are grateful for helpful comments and suggestions from ENTFIN Lyon 2016, Emerging Trends in Entrepreneurial Finance Conference 2017 and ICGS Conference 2017.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. From Renneboog and Simons (2008), all PtoP transactions are financed by borrowing substantially beyond the industry average and are thus leveraged buyouts (LBO). In this article, we employ different synonyms for a going private transactions as PtoP or LBO.