Working paper
Earnings Myopia and Private Equity Takeovers
University of Connecticut School of Business Research Paper, Vol.No. 21-15
SSRN
09/10/2021
DOI: 10.2139/ssrn.3919634
Abstract
We examine whether earnings myopia among publicly traded companies motivates private equity firms to acquire them. Using a sample of private equity takeovers, we show that multiple measures of myopia increase the likelihood of takeover by private equity buyers. In contrast, private takeovers motivated for strategic reasons do not have a similar association with myopia measures, nor do takeovers by public firms. We further show that post-takeover, firms exhibit significantly less earnings myopia, including increased investment in R&D. Our results suggest that the cost of earnings myopia can be sufficiently large to warrant a takeover by private equity and contributes to the shrinking number of publicly traded firms
Details
- Title: Subtitle
- Earnings Myopia and Private Equity Takeovers
- Creators
- Paul Hribar - University of IowaTodd D Kravet - University of ConnecticutTrent Krupa - University of Arkansas at Fayetteville
- Resource Type
- Working paper
- Publication Details
- University of Connecticut School of Business Research Paper, Vol.No. 21-15
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.3919634
- Number of pages
- 54 pages
- Language
- English
- Date posted
- 09/10/2021
- Date updated
- 03/15/2024
- Academic Unit
- Accounting
- Record Identifier
- 9984380708702771
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