Performance in Private Equity: Are General Partnership Owners Important?

28 Pages Posted: 22 Jul 2010

See all articles by Stefano Caselli

Stefano Caselli

Bocconi University - Department of Finance

Francesca Querci

Università degli Studi di Genova

Stefano Gatti

Bocconi University - Department of Finance

Date Written: January 20, 2010

Abstract

This study demonstrates that the ownership of private equity (PE) funds influences investment performance. The analysis focuses on the universe of PE investments made by Italian closed-end funds from 1999 to 2005. We find that bank-owned funds generally engage in weaker monitoring of the firms in which they invest, because their representatives hold a plurality of offices on boards of directors of such firms, whether PE-backed or not. This leads to lower revenue growth for portfolio firms, and consequently to lower IRR. On the contrary, corporate-owned funds are able to enforce closer supervision of their investments, leading to better performance.

Keywords: Private Equity, Performance, Ownership

JEL Classification: G24

Suggested Citation

Caselli, Stefano and Querci, Francesca and Gatti, Stefano, Performance in Private Equity: Are General Partnership Owners Important? (January 20, 2010). 23rd Australasian Finance and Banking Conference 2010 Paper. Available at SSRN: https://ssrn.com/abstract=1645924 or http://dx.doi.org/10.2139/ssrn.1645924

Stefano Caselli

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Francesca Querci

Università degli Studi di Genova ( email )

via Vivaldi 5
Genova, 16121
Italy

Stefano Gatti (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

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