A Global Analysis of Private Investments in Public Equity

Andriosopoulos, Dimitris; Panetsidou, Styliani

doi:10.2139/ssrn.3256202

Cited by 2 publications

(6 citation statements)

References 110 publications

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“…This indicates a greater need for monitoring through leverage in low quality regulatory environments that suffer from greater information asymmetry and opaqueness. This finding corroborates theoretical and empirical studies suggesting that institutional quality environment matters for economic outcomes (La Porta et al, 1997;Qian and Strahan, 2007;Andriosopoulos and Panetsidou, 2021).…”

Section: Introductionsupporting

confidence: 90%

“…Also, monitoring through ownership concentration complements monitoring induced by leverage. Our findings complement the literature on law and finance, ownership structures and capital markets (La Porta et al, 1997;Shleifer and Vishny, 1997;La Porta et al, 1998;Lombardo and Pagano, 1999;Claessens et al, 2000;Gompers et al, 2003;Andriosopoulos and Panetsidou, 2021;King et al, 2021). Hence, this examination provides important implications to policy makers as it advances our understanding on the role of leverage as a monitoring mechanism across different institutional quality environments and varying ownership concentration structures.…”

Section: Leverage and Institutional Qualitysupporting

confidence: 76%

“…La Porta et al (1997; forgoing good investments for bad ones or by facing more financial constraints (Park, 2012;Ullah, 2020). Importantly, strong country governance leads to better economic outcomes, superior transparency, investor protection and monitoring (Rajan and Zingales, 1998;Lombardo and Pagano, 1999;Wurgler, 2000;Gompers et al, 2003;Lombardo and Pagano, 2006;Qian and Strahan, 2007;Hooper et al, 2009;Chiou et al, 2010;Andriosopoulos and Panetsidou, 2021). Therefore, markets with weaker regulatory environments that suffer from opaqueness and information asymmetry, could be in greater need for monitoring.…”

Section: Institutional Environments and The Role Of Leveragementioning

confidence: 99%

“…Next, to test the robustness of our results, we exclude countries that dominate our sample, to assess whether our results are influenced by these countries. This is standard practice in international literature (e.g., Alvarez et al, 2018;Manconi et al, 2019;Andriosopoulos and Panetsidou., 2021). Table 6 presents the results.…”

Section: Excluding High Observation Countriesmentioning

confidence: 99%

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Leverage, investment and institutional environments: Evidence from emerging markets

2022

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Section: Introductionsupporting

confidence: 90%

Section: Leverage and Institutional Qualitysupporting

confidence: 76%

Section: Institutional Environments and The Role Of Leveragementioning

confidence: 99%

Section: Excluding High Observation Countriesmentioning

confidence: 99%

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Leverage, investment and institutional environments: Evidence from emerging markets

2022

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“…In a period from 2001 to 2015, there were 11,296 private placements of common stock by US listed firms that raised $243.9bn through PIPE transactions (Lim et al, 2021). Out of 36,543 PIPE issues in a global setting in 1995-2015, as reported in Andriosopoulos and Panetsidou (2021), 18,849 issues occurred in the USA, 8,925 in Americasexcluding the USA, 5,879 deals were conducted in Asia-Pacific region, while Europe had 2,890 transactions with an average annual deal value of $35bn. Recent years demonstrated rapid growth in the number and volume of deals with the USA remaining the most active market.…”

Section: Introductionmentioning

confidence: 99%

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

Berezinets

Ilina

2021

SEF

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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.

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A Global Analysis of Private Investments in Public Equity

Cited by 2 publications

References 110 publications

Leverage, investment and institutional environments: Evidence from emerging markets

Leverage, investment and institutional environments: Evidence from emerging markets

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

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