MILLSTEIN CENTER‐ECGI CONFERENCE ON: Board 3.0: Bringing the Private Equity Model to Public Companies

2021 ◽  
Vol 33 (3) ◽  
pp. 59-94
Author(s):  
Ronald Gilson ◽  
Jeffrey N. Gordon ◽  
Kathryn Judge ◽  
Wei Jiang ◽  
Ray Cameron ◽  
...  
Keyword(s):  
Private Equity ◽  
Public Companies ◽  
Equity Model

Thirty years after Jensen’s prediction: Is private equity a superior form of ownership?

2020 ◽  
Vol 36 (2) ◽  
pp. 291-313 ◽  
Author(s):  
Peter Morris ◽  
Ludovic Phalippou
Keyword(s):  
Private Equity ◽  
Financial Statements ◽  
Harvard Business Review ◽  
Corporate Ownership ◽  
Public And Private ◽  
The Public ◽  
Equity Model ◽  
High Level ◽  
Time And Energy ◽  
Positive Results

Abstract Almost exactly 30 years ago, a famous article by Michael Jensen in the Harvard Business Review predicted that private equity would ‘eclipse’ the public corporation because it was a superior form of corporate ownership. Trends since 1989 seem to bear out Jensen’s prediction. Much time and energy has gone into studying whether the private equity model does see companies being run better for investors and society. Progress has been made and most studies find positive results. But samples are usually relatively small. And the relative complexity of private equity transactions, combined with a high level of privacy, makes it hard to find financial statements that are tractable enough for meaningful analysis. After 30 years of research, we argue that a conclusive answer to the question remains further away than might seem to be the case. In the meantime, the appropriate regulatory response involves narrowing the ‘regulatory gap’ between public and private markets.

Determinants of Corporate Bond Trading: A Comprehensive Analysis

2017 ◽  
Vol 07 (02) ◽  
pp. 1750003 ◽  
Author(s):  
Edith Hotchkiss ◽  
Gergana Jostova
Keyword(s):  
Trading Volume ◽  
Private Equity ◽  
Corporate Bonds ◽  
Interest Rate Risk ◽  
Corporate Bond ◽  
High Yield ◽  
Insurance Company ◽  
Publicly Traded ◽  
Public Companies ◽  
Investment Grade

This paper studies the determinants of trading volume and liquidity of corporate bonds. Using transactions data from a comprehensive dataset of insurance company trades, our analysis covers more than 17,000 US corporate bonds of 4,151 companies over a five-year period prior to the introduction of TRACE. Our transactions data show that a variety of issue- and issuer-specific characteristics impact corporate bond liquidity. Among these, the most economically important determinants of bond trading volume are the bond’s issue size and age — trading volume declines substantially as bonds become seasoned and are absorbed into less active portfolios. Stock-level activity also impacts bond trading volume. Bonds of companies with publicly traded equity are more likely to trade than those with private equity. Further, public companies with more active stocks have more actively traded bonds. Finally, we show that while the liquidity of high-yield bonds is more affected by credit risk, interest-rate risk is more important in determining the liquidity of investment-grade bonds.

scholarly journals Formation of Proactive Strategies of Chinese Private Equity Funds in the Russian Corporate Control Market

2019 ◽  
pp. 660-677
Author(s):  
Maria M. Musatova ◽  
Larisa I. Lugacheva ◽  
Elena A. Solomennikova
Keyword(s):  
Private Equity ◽  
Import Substitution ◽  
Corporate Control ◽  
Public Companies ◽  
Russian Market ◽  
Factors Affecting ◽  
Russian Economy ◽  
Equity Funds ◽  
Multi Agent ◽  
Private Equity Funds

The article discusses the boundaries and contours of the possible institutional behavior of private equity funds (PEFs) in the Russian Federation in modern conditions. It analyzes the transformation of PEF sectoral interests in the Russian assets of non-public companies in the period of economic instability. Besides, it gives a relevant assessment of changes in the regional aspects of interaction between PEFs and recipient companies from Russia against the background of sanctions and import substitution, as well as private equity cycle. The article presents the modern metrics of Chinese PEFs and a multi-level monitoring of existing Chinese PEF projects in the Russian economy. It also analyzes the effects of multi-agent relations of PEFs and target companies in Russia against the background of a gradual recovery of the country’s economic growth. The article discusses the current and preferred format for the participation of investors in the PE market in the context of the adaptation of the Russian economy to the sanctions regime. It identifies the factors affecting the prospects and dynamics of the development of Chinese PEFs with an investment mandate for Russia and discusses the mechanisms of institutional support for expanding the presence of Chinese PEs in the Russian market for corporate control

Financing the Next Generations of Innovation: New Dimensions in the Private Equity Model

2019 ◽  
Vol n°29 (1) ◽  
pp. 7
Author(s):  
Laure-Anne Parpaleix ◽  
Kevin Levillain ◽  
Blanche Segrestin
Keyword(s):  
Private Equity ◽  
Equity Model

scholarly journals Private Equity & Venture Capital

2020 ◽  
Author(s):  
Keith Arundale ◽  
Colin Mason
Keyword(s):  
Venture Capital ◽  
Private Equity ◽  
Early Stage ◽  
High Growth ◽  
Government Support ◽  
Growth Trend ◽  
Public Companies ◽  
The Past ◽  
Under Performing ◽  
Start Ups

Private equity has successfully weathered economic crises in the past and appears to be well-placed to manage the current coronavirus crisis. Whilst both fundraising and investments will be significantly reduced from pre-pandemic levels for some time these are expected to recover and resume the historic overall growth trend. Private equity firms may find opportunities through taking undervalued public companies private and in restructuring under-performing businesses. However, start-ups may find seed and early stage finance hard to access. Government support measures need to meet the characteristics and needs of high growth enterprises.

What Public Companies Can Learn from Private Equity: Pursue the Value Journey

2009 ◽  
Vol 12 (3) ◽  
pp. 20-28 ◽  
Author(s):  
William J Hass ◽  
Shepherd G Pryor
Keyword(s):  
Private Equity ◽  
Public Companies

Investor activism strategies of private equity firms: evidence from continental Europe

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irina Berezinets ◽  
Yulia Ilina
Keyword(s):  
Empirical Evidence ◽  
Value Creation ◽  
Private Equity ◽  
Private Investment ◽  
Shareholder Activism ◽  
Listed Companies ◽  
Target Firm ◽  
Public Companies ◽  
Content Type ◽  
Target Firms

Purpose This paper aims to deal with the issue of shareholder activism of private equity investors in public companies. The study identifies characteristics of target firms and investors related to the likelihood of private equity activism. The research also examines whether shareholder activism strategy of private equity investors is associated with the better performance in future and value creation of target firms. Design/methodology/approach The paper applies econometric modeling to hand-collected data on private equity investments in listed companies, in the form of private investment in public equity and open-market share purchases, from eight Continental Europe’s countries for the period 2005–2014. Findings The findings indicate that the probability of shareholder activism is higher if the target firm’s industry corresponds to the private equity investor’s industry specialization, if the private equity firm is older, if the target is larger and the average ownership share purchased by the investor is higher. Conversely, the probability of shareholder activism is lower where a private equity firm invests in the target for the first time. A target firm with an activist investor has poorer operational performance results one year following the investment compared to a target firm with a passive private equity investor. Research limitations/implications Results from the analysis of transactions in Continental Europe countries with French and German legal origin may be not generalizable to other markets with the different legal tradition and institutional environment. Originality/value This research provides new empirical evidence on private equity activism in listed companies of Continental Europe. By distinguishing between active and passive investments, testing rarely considered characteristics to provide valuable insights and analyzing the effect of activism on the target firm’s performance, the study contributes variously to the still-limited body of literature on private equity activism in public companies with a governance structure based on concentrated ownership. The findings emphasize the relationship between shareholder activism and both target and investor’s characteristics from perspective of mitigating agency problem and value creation in target firms. By simultaneously investigating investments in public companies from several European markets, the study complements empirical evidence mostly obtained from studies of a single national market.

Private Equity and Asian Political Economy: "Domestic" Private Equity Funds as New Actors

Asian Survey ◽  
2010 ◽  
Vol 50 (2) ◽  
pp. 356-377 ◽  
Author(s):  
Justin Robertson
Keyword(s):  
Political Economy ◽  
Civil Society ◽  
Emerging Markets ◽  
Private Equity ◽  
Asian Countries ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Equity Model ◽  
The U.S

Private equity funds, particularly those headquartered in the U.S., have come under heavy attack internationally from civil society and regulators. At the same time, locally owned private equity funds have unexpectedly appeared in significant numbers across emerging markets. The analysis in this paper illustrates how actors that are only notionally domestic are introducing the neoliberal private equity model into Asian countries, particularly China and Korea.

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