The Effects of Business Angels, Private Equity and Lead Managers on the Performance of North African IPO Firms
24 Pages Posted: 25 May 2010
Date Written: May 25, 2010
This paper examines the interrelationship between business angel and private equity/venture capital investors with lead managers and their effects on IPO firm performance in the North African region. Using a unique and comprehensive dataset of 63 locally listed IPO firms from across North Africa we find evidence of strategic interaction between foreign private equity investors and foreign lead managers. While there is evidence that business angels value private equity involvement in firms there is little evidence of business angel participation in firm financing having any effect on private equity involvement. However the evidence suggests that business angels given their closer and more intrusive involvement with management are preferable as a governance mechanism than private equity investors who tend only to engage high value firms with relatively little financial gearing.
Keywords: IPO, Underpricing, Family Firms, North Africa, Agency Theory
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