Benefits of Public Reporting: Evidence from IPOs Backed by Listed Private Equity Firms

38 Pages Posted: 14 Feb 2015 Last revised: 4 Jan 2017

See all articles by M. Sinan Goktan

M. Sinan Goktan

California State University, East Bay

Volkan Muslu

C.T. Bauer College of Business University of Houston

Date Written: October 2016

Abstract

Private equity firms that are listed in stock exchanges commit to extensive public disclosures. In contrast, unlisted private equity firms communicate privately with partner investors. We examine the reporting quality of portfolio companies that are backed by listed and unlisted private equity firms worldwide. We find that portfolio companies that are backed by listed private equity firms report lower abnormal accruals, recognize losses faster, and experience higher post-IPO stock returns. These findings are stronger for smaller and European portfolio companies, and those that receive direct private equity investments. Overall, our findings suggest that the public reporting model of listed private equity firms brings greater capital market benefits than the private reporting model of unlisted private equity firms.

Keywords: Listed private equity, IPO, earnings management

JEL Classification: G24, D80

Suggested Citation

Goktan, Sinan and Muslu, Volkan, Benefits of Public Reporting: Evidence from IPOs Backed by Listed Private Equity Firms (October 2016). Available at SSRN: https://ssrn.com/abstract=2564424 or http://dx.doi.org/10.2139/ssrn.2564424

Sinan Goktan

California State University, East Bay ( email )

25800 Carlos Bee Blvd
Hayward, CA 94542
United States
510-885-3797 (Phone)
510-885-7175 (Fax)

Volkan Muslu (Contact Author)

C.T. Bauer College of Business University of Houston ( email )

4750 Calhoun Road
Houston, TX 77204
United States
713 7434924 (Phone)

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