Private Equity, Ownership, and Regulation

Journal of Private Equity, Vol. 14, No. 1, pp. 17-24, Winter 2010

Posted: 11 Oct 2010 Last revised: 25 Nov 2010

See all articles by Aviv Pichhadze

Aviv Pichhadze

affiliation not provided to SSRN

Date Written: October 10, 2010

Abstract

I show that private equity transactions (i) illustrate market-driven reactions to inefficient equity markets that result from the diffusion of equity ownership in the public firm and (ii) form part of a larger market trend to-wards the market oriented blockholder model – a hybrid ownership structure that offers the benefits of monitoring associated with concentrated ownership along with the benefits of promoting liquid and efficient capital markets associated with diffused ownership. The analysis also explores the regulatory implications of the trend. In particular, I observe that policymakers display lack of awareness of the trend. Consequently, policymakers face the hazard (i) of amplifying embedded distortions within the US securities regulatory framework and (ii) of introducing what I call regulatory systemic risk into the framework.

Keywords: Adaptation, corporate governance, ownership, private equity, regulation, risk

JEL Classification: G18, G32, G34, G38, K22

Suggested Citation

Pichhadze, Aviv, Private Equity, Ownership, and Regulation (October 10, 2010). Journal of Private Equity, Vol. 14, No. 1, pp. 17-24, Winter 2010, Available at SSRN: https://ssrn.com/abstract=1690314

Aviv Pichhadze (Contact Author)

affiliation not provided to SSRN

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