O papel certificador dos fundos de private equity e venture capital na qualidade das empresas estreantes na BM&FBovespa

The Impact of Private Equity Funds on the Cost of Capital of Invested Companies in Brazil

“…The significance of the PE/VC dummy variable and its positive sign also find support among the studies that focused on the performance improvements of invested companies (GORMAN; SAHLMAN, 1987;UCHIMURA, 2011;ELLER, 2012;BOTTAI, 2013;TESTA;LIMA, 2013). Higher returns derive from PE/VC funds' influence on performance and market evaluation, explaining the higher return on equity and, to some extent, higher overall cost of capital.…”

“…From the investor standpoint, however, it represents a low liquidity, highly risky opportunity that demands a great deal of scrutiny in order to be approved (TESTA; LIMA, 2013). The higher the stimulus and willingness of PE/VC funds to invest, the more competitive it is, forcing the overall credit market to adjust its lending spread and thus, reducing the cost of debt (GILSON; BLACK, 1999;RIBEIRO, 2005;TESTA;LIMA,2013).…”

“…Many studies GARBRECHT, 2013;GIOIELLI, 2013;TESTA;LIMA, 2013) state that PE/VC participation reinforces the importance ofwell-established corporate governance mechanisms.…”

“…Complementing Huang andRitter (2009), Albanez (2012) discusses the influence of market value on leverage under the Market Timing theory. Casotti and Motta (2008) test returns right after Initial Public Offering (IPO) and over the following three years, using both the adjusted CAPM and evaluation by multiples.PE/VC studies, on the other hand, have in general focused on the performance improvements of invested companies (GORMAN; SAHLMAN, 1987;BRAV;GOMPERS, 1997;HELLMANN;PURI, 2002;TESTA;LIMA, 2013;BASTOS, 2014).…”

“…Cost of equity, on the contrary, may increase due to higher rates of return targeted by PE/VC funds (TESTA; LIMA, 2013;GOMPERS et al, 2014;BASTOS, 2014). Such is not a straight forward consequence, since it could be expected that governance improvements introduced by PE/VC could reduce overall costs with an increase in efficiency.…”