The Institutional Determinants of Private Equity Involvement in Business Groups – The Case of Africa

Journal of World Business (Forthcoming)

IFN Working Paper No. 1082

47 Pages Posted: 4 Oct 2015 Last revised: 27 Oct 2016

See all articles by Bruce Allen Hearn

Bruce Allen Hearn

University of Southampton

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Trond Randøy

University of Agder - School of Management

Date Written: September 15, 2015

Abstract

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African economies. We adopt an actor centered institutional-theoretic perspective in rationalizing institutional voids and the advantages of maintained governance by both business angels (BA) and venture capital (VC) private equity. Our findings reveal private equity retain higher post-IPO ownership in business group constituents compared to unaffiliated firms and that this is inversely moderated in the context of improving institutional quality. Our result adds to the literature on multifocal corporate governance mechanisms.

Keywords: Business Group, Business Angel, Venture Capital, Africa, IPO, Ownership Structure, Institutional Voids, Property Rights Protection

JEL Classification: K00, G10, G30, G32, G34, G38

Suggested Citation

Hearn, Bruce Allen and Oxelheim, Lars and Randøy, Trond, The Institutional Determinants of Private Equity Involvement in Business Groups – The Case of Africa (September 15, 2015). Journal of World Business (Forthcoming); IFN Working Paper No. 1082. Available at SSRN: https://ssrn.com/abstract=2668634 or http://dx.doi.org/10.2139/ssrn.2668634

Bruce Allen Hearn (Contact Author)

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Lars Oxelheim

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
SE-10215 Stockholm
Sweden
+46 8 665 4527 (Phone)
+46 8 665 4599 (Fax)

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

P.O.Box 7080
S-220 07 Lund
Sweden
+46462228744 (Phone)

Trond Randøy

University of Agder - School of Management ( email )

Adger Research Foundation
Serviceboks 422 Bygg H
N-4604 Kristiansand
Norway
47 3814 1027 (Phone)

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