Factors that Determine the Reputation of Private Equity Managers in Developing Markets

Croce, A., Martí, J., Murtinu, S. (2013). The Impact of Venture Capital on the Productivity of European High-Tech Firms: Screening or Value Added Effect?. Journal of Business Venturing, 28, 489-510.

35 Pages Posted: 26 Feb 2005 Last revised: 15 Dec 2017

See all articles by Marina Balboa

Marina Balboa

University of Alicante - Department of Financial Economics

José Martí

Universidad Complutense de Madrid - Department of Accounting and Finance

Abstract

This paper analyses the factors that determine the reputation of private equity managers in their relationship with investors in developing markets. Our sample comprises almost all private equity managers of Spain. These markets lack information on the track record of managers, so other kind of information should be considered instead by investors. Two groups of variables that might affect reputation are identified: variables in the first group are linked to the private equity activity, and those in the second are related to external characteristics. Regarding the first group, results show that the volume of investments, the ratio number of investments per investment manager and the percentage of total divestments that are carried out through initial public offerings and trade sales act as an indicator of the ability to manage larger amounts of capital. Regarding the second group, we find that the belonging to the national private equity association and the size of the funds under management are exogenous characteristics of the highest importance.

Keywords: Agency and Signaling theories, fundraising, private equity, reputation

JEL Classification: G24, G34

Suggested Citation

Balboa, Marina and Martí Pellón, José, Factors that Determine the Reputation of Private Equity Managers in Developing Markets. Croce, A., Martí, J., Murtinu, S. (2013). The Impact of Venture Capital on the Productivity of European High-Tech Firms: Screening or Value Added Effect?. Journal of Business Venturing, 28, 489-510., Available at SSRN: https://ssrn.com/abstract=673841 or http://dx.doi.org/10.2139/ssrn.673841

Marina Balboa (Contact Author)

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)

José Martí Pellón

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)

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