Delistings, Controlling Shareholders and Firm Performance in Europe

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.