Private Equity Exits in Emerging Markets

47 Pages Posted: 5 Apr 2015

See all articles by Sofia Johan

Sofia Johan

Florida Atlantic University - Finance; University of Aberdeen; Tilburg Law and Economics Center (TILEC)

Minjie Zhang

Odette School of Business - University of Windsor

Date Written: April 1, 2015


Encouraged by the prospect of higher returns in the increasingly open emerging market economies, private equity investors have sought ways to profitably invest in these markets. Unfortunately it has been found that investing in emerging markets may not necessarily be as easy as it seems. We seek to add to existing research in analyzing potential determinants of success in private equity markets in these emerging markets. Using deal level data from 2,733 private equity deals from 35 emerging markets between 1992 and 2012, we find that private equity fund managers have a higher probability of successful exits in countries with better business environments. We also find that more active management may potentially mitigate the potential costs associated with inefficient and corrupt business environments and thus increase the probability of successful exits in countries with higher levels of corruption. Moreover, our findings suggest that market shocks arguably concentrated in the developed markets result in a negative ripple effect as the probability of successfully exiting, especially by way of an initial public offering, decreases for private equity investors in emerging markets. Our findings are robust even after controlling for macroeconomic and security market conditions, cultural dimensions, deals, investors and investee firms’ characteristics as well as industry effects.

Keywords: Private Equity, emerging markets, IPO, BRIC countries, corruption

JEL Classification: G15

Suggested Citation

Johan, Sofia A. and Zhang, Minjie, Private Equity Exits in Emerging Markets (April 1, 2015). Available at SSRN: or

Sofia A. Johan (Contact Author)

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States


University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE

Minjie Zhang

Odette School of Business - University of Windsor ( email )

401 Sunset Avenue
Windsor, Ontario N9B 3P4

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