CFA Level I · CFA Level I Exam · Organizational Forms, Corporate Issuer Features, and Ownership
A company announces it will go private through a buyout. This decision is most likely motivated by the desire to:
A company going private is most likely motivated by reducing regulatory compliance and public reporting costs, along with escaping short-term market pressure. Broadening the shareholder base and increasing share liquidity are reasons firms go public, not private.
- Abroaden the shareholder base to raise more equity
- Bincrease the liquidity of its shares for small investors
- Creduce the costs of regulatory compliance and public reportingCorrect
Explanation
Going private removes listing and disclosure obligations and their costs. Broader shareholder base and liquidity are reasons to be public.
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