The Effects of Private Equity Investors on the Governance of Companies

48 Pages Posted: 20 Aug 2015 Last revised: 14 Dec 2015

See all articles by Stefano Bonini

Stefano Bonini

Stevens Institute of Technology - School of Business

Vincenzo Capizzi

University of Piemonte Orientale - Department of Economics and Business Studies; SDA Bocconi School of Management

Date Written: June 30, 2015

Abstract

An increasingly important external control mechanism affecting the governance of young and fast growing companies worldwide is the emergence of institutional and private equity investors, as equity owners. Institutional investors have the potential to influence management’s activities directly through their ownership, and indirectly by trading their shares (Gillan and Starks, 2003). As a result, companies backed by private equity investors represent a fruitful environment to investigate the use and efficiency of a multitude of control mechanisms. However the surge over the last 30 years in investment activity by private equity investors at large, has given rise to an increased specialization that nowadays profoundly distinguishes business angels from venture capitalists and buyout specialists. While these investors share common traits such as a value maximization approach, risk-return informed decisions, and a finite investment horizon, the monitoring and control mechanisms associated with their stage focus and consequent risk-return profile are substantially different. In this paper we aim at presenting an up-to-date review of the main theoretical contributions and empirical results in this active and growing field of research.

Keywords: Private Equity Investors, Business Angels, Venture Capitalists, Corporate Governance

JEL Classification: G24, G31, G32

Suggested Citation

Bonini, Stefano and Capizzi, Vincenzo, The Effects of Private Equity Investors on the Governance of Companies (June 30, 2015). Stevens Institute of Technology School of Business Research Paper No. 2015-55, Available at SSRN: https://ssrn.com/abstract=2647219 or http://dx.doi.org/10.2139/ssrn.2647219

Stefano Bonini (Contact Author)

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Vincenzo Capizzi

University of Piemonte Orientale - Department of Economics and Business Studies ( email )

Via E. Perrone, 18
Novara, NO 28100
Italy
+390321375438 (Phone)
+390321375405 (Fax)

HOME PAGE: http://www.uniupo.it

SDA Bocconi School of Management ( email )

Via F. Bocconi, 8
Milan, Milan 20136
Italy
+390258365966 (Phone)
+390258366893 (Fax)

HOME PAGE: http://www.sdabocconi.it

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
132
Abstract Views
720
rank
234,831
PlumX Metrics