Private Equity Investor Sentiment Around the World

66 Pages Posted: 13 Oct 2017

See all articles by Minjie Zhang

Minjie Zhang

Odette School of Business - University of Windsor

Date Written: September 2017


I propose a new investor sentiment measurement for the private equity market based on over 12,000 private equity deals from 68 countries over 1992 to 2012. The data indicate that institutional environments and firm-specific characteristics are both strong determinants of the private equity investor sentiment. This investor sentiment will be relatively higher for smaller entrepreneurial firms in countries with better legal environments and with cultures characterized by higher levels of risk-taking. Such behaviors are robust when accounting for the prior investor sentiment. I also document the differences of this investor sentiment across different markets and investor types as well as the impacts from the recent financial crisis on it. In addition, I find that this investor sentiment can help identify and predict the investee firm-level profitability and earnings potential both in the short and long time horizons. It also can reflect the market timing abilities of PE investors when executing their divestment strategies successfully by using initial public offerings or acquisitions.

Keywords: Investor Sentiment, Private Equity, Alternative Investments, IPO, Acquisition, Law and Finance, Culture, Financial Crisis

JEL Classification: G01, G02, G11, G23, G24, G34, K22

Suggested Citation

Zhang, Minjie, Private Equity Investor Sentiment Around the World (September 2017). Available at SSRN: or

Minjie Zhang (Contact Author)

Odette School of Business - University of Windsor ( email )

401 Sunset Avenue
Windsor, Ontario N9B 3P4

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