Sources of value gains in minority equity investments by private equity funds: Evidence from block share acquisitions
- Authors
- Chen, Guojun; Kang, Jun-Koo; Kim, Jin-Mo; Na, Hyun Seung
- Issue Date
- 12월-2014
- Publisher
- ELSEVIER SCIENCE BV
- Keywords
- Private equity; Minority equity investment; Governance engineering; Operational engineering; Board of directors; Monitoring and advisory roles
- Citation
- JOURNAL OF CORPORATE FINANCE, v.29, pp.449 - 474
- Indexed
- SSCI
SCOPUS
- Journal Title
- JOURNAL OF CORPORATE FINANCE
- Volume
- 29
- Start Page
- 449
- End Page
- 474
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/96687
- DOI
- 10.1016/j.jcorpfin.2014.09.003
- ISSN
- 0929-1199
- Abstract
- Using block share acquisitions made by private equity (PE) funds, we examine the sources of value gains in PE minority equity investments. We find that compared with non-PE acquirers, PE acquirers are more likely to place representatives with finance experience or those with experience in the target's industry on the target's board when the need for target oversight and/or advice is higher. The targets in PE acquisitions, particularly poorly performing targets, targets with high R&D intensity, and targets with PE-appointed directors who have experience in the target's industry, realize both higher announcement returns and better post-acquisition operating performance than do targets in non-PE acquisitions. These findings suggest that the governance and operational engineering that PE acquirers apply to their targets constitutes important sources of value creation in PE minority equity investments. (C) 2014 Elsevier B.V. All rights reserved.
- Files in This Item
- There are no files associated with this item.
- Appears in
Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
Items in ScholarWorks are protected by copyright, with all rights reserved, unless otherwise indicated.