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Title: Sources of value gains in minority equity investments by private equity funds : evidence from block share acquisitions
Authors: Chen, Guojun
Kang, Jun-Koo
Kim, Jin-Mo
Na, Hyun Seung
Keywords: DRNTU::Business::Finance::Corporate finance
Issue Date: 2014
Source: Chen, G., Kang, J.-K., Kim, J.-M., & Na, H. S. (2014). Sources of value gains in minority equity investments by private equity funds : evidence from block share acquisitions. Journal of corporate finance, 29, 449-474.
Series/Report no.: Journal of corporate finance
Abstract: Using block share acquisitions made by private equity (PE) funds, we examine the sources of value gains in PE minority equity investments. We find that compared with non-PE acquirers, PE acquirers are more likely to place representatives with finance experience or those with experience in the target's industry on the target's board when the need for target oversight and/or advice is higher. The targets in PE acquisitions, particularly poorly performing targets, targets with high R&D intensity, and targets with PE-appointed directors who have experience in the target's industry, realize both higher announcement returns and better post-acquisition operating performance than do targets in non-PE acquisitions. These findings suggest that the governance and operational engineering that PE acquirers apply to their targets constitutes important sources of value creation in PE minority equity investments.
ISSN: 0929-1199
DOI: 10.1016/j.jcorpfin.2014.09.003
Rights: © 2014 Elsevier B.V. This is the author created version of a work that has been peer reviewed and accepted for publication by Journal of Corporate Finance, Elsevier B.V. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [Article DOI:].
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:NBS Journal Articles

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