How Do Investment Patterns of Independent and Captive Private Equity Funds Differ? Evidence from Germany

Financial Markets and Portfolio Managment, Vol. 20, No. 4, pp. 399-418, 2006

Posted: 24 Jan 2007

See all articles by Tereza Tykvova

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Abstract

Empirical literature emphasizes a positive contribution of private equity investors, which results from their combined provision of capital, monitoring, and management support. The aim of this study is to show that these previous results, which are based mostly on the analysis of US independent closed-end private equity funds, cannot be generalized since the private equity industry should not be treated as homogenous. We argue that it is necessary to distinguish between different types of private equity providers because their differing governance structures, strategic goals and experiences have a decisive influence on their value adding activities. The results of this study - which uses a data set of 179 German private equity-backed companies - are consistent with the conjecture that independent and corporate private equity providers tend to have a more pronounced role in corporate governance and monitoring of the companies they finance, than bank-dependent and governmental funds which often serve only as bridge investors.

Keywords: Private equity, Value adding, IPO

JEL Classification: D82, G24, G32

Suggested Citation

Tykvova, Tereza, How Do Investment Patterns of Independent and Captive Private Equity Funds Differ? Evidence from Germany. Financial Markets and Portfolio Managment, Vol. 20, No. 4, pp. 399-418, 2006, Available at SSRN: https://ssrn.com/abstract=959150

Tereza Tykvova (Contact Author)

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Germany

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