Characterization of the Reputation of Private Equity Managers: Evidence in Spain

32 Pages Posted: 20 May 2003 Last revised: 18 May 2009

See all articles by José Martí

José Martí

Universidad Complutense de Madrid - Department of Accounting and Finance

Marina Balboa

University of Alicante - Department of Financial Economics

Abstract

In the light of the Agency and Signalling Theories, the aim of this paper is to analyse the relationship between investors and private equity managers in order to identify the factors that affect the latter's reputation. Since there are no individual references about their past returns, the reputation of such players is thought to be linked to their capacity for obtaining new funds in countries such as Spain. Two groups of variables that might affect reputation are identified: variables in the first group are linked to the private equity cycle, and those in the second are related to the external image of the operator. The analysis focuses on the activity of almost all private equity investors operating in Spain during 1991-2001. The results provide evidence that the size of the funds under management and the belonging to the National Private Equity Association are exogenous characteristics of the highest importance. Evidence of the volume of investments recorded in the past acts as an indicator of the ability to manage larger amounts of capital. Because of the wide variety of private equity firms, the analysis is completed for diverse groups, which may behave in a different manner.

Keywords: Fundraising, private equity, reputation; agency, signalling theory

JEL Classification: G24, G34

Suggested Citation

Martí Pellón, José and Balboa, Marina, Characterization of the Reputation of Private Equity Managers: Evidence in Spain. Journal of Business Venturing, Vol. 22, No. 4, pp. 453-480, 2007, Available at SSRN: https://ssrn.com/abstract=391662 or http://dx.doi.org/10.2139/ssrn.391662

José Martí Pellón (Contact Author)

Universidad Complutense de Madrid - Department of Accounting and Finance ( email )

Carretera de Humera s/n
Madrid 28223, Madrid 28223
Spain
+ 3491 3942310 (Phone)
+ 34 91 3942534 (Fax)

Marina Balboa

University of Alicante - Department of Financial Economics ( email )

Ctra. S. Vicente s/n
03690-S. Vicente del Raspeig
Alicante, San Vicente del Raspeig - Alicante 03690
Spain
+34 96 590 3400 Ext. 3135 (Phone)
+34 96 590 3621 (Fax)

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