Do the effects of private equity investments on firm performance persist over time?

Stefano Monferra', Antonio Meles, Stefano Monferrà, Vincenzo Verdoliva

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This study examines whether the effect of private equity (PE) investments persists over time or wears off after the PE investors exit. Unlike previous studies that focus on the PE-backed initial public offerings (IPOs), we constructed a unique and distinctive dataset comprising PE investments exiting both via IPO and other common ways (i.e., trade sale, secondary buy-out and buy-back). Consistent with Jain and Kini (1995), we observe that PE-backed firms outperform other firms. Our results shed light on existing literature because we find that whether PE investments continue to benefit the portfolio firms is strictly related to the type (venture capital versus buy-out) and length of the PE investment, the nature of the PE investor (bank-based versus nonbank based), and the exit strategy (IPO versus other exit strategies). © 2014 © Taylor & Francis.
Original languageEnglish
Pages (from-to)203-218
Number of pages16
JournalAPPLIED FINANCIAL ECONOMICS
Volume24
DOIs
Publication statusPublished - 2014

Keywords

  • Economics and Econometrics
  • Finance
  • buy-out
  • exit strategy
  • operating performance
  • private equity
  • venture capital

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