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Benefits of public reporting: Evidence from IPOs backed by listed private equity firms

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  • Goktan, M. Sinan
  • Muslu, Volkan

Abstract

Private equity firms that are listed on stock exchanges commit to extensive public disclosures. By contrast, unlisted private equity firms communicate privately with partner investors. We examine the reporting quality of portfolio companies that are backed by listed and unlisted private equity firms worldwide. We find that portfolio companies that are backed by listed private equity firms report lower abnormal accruals, recognize losses faster, and experience higher post-IPO stock returns. These findings are stronger for smaller and European portfolio companies and those that receive direct private equity investments. Overall, our findings suggest that the public reporting model of listed private equity firms leads to greater capital market benefits than the private reporting model of unlisted private equity firms.

Suggested Citation

  • Goktan, M. Sinan & Muslu, Volkan, 2018. "Benefits of public reporting: Evidence from IPOs backed by listed private equity firms," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 669-688.
    • Handle: RePEc:eee:corfin:v:50:y:2018:i:c:p:669-688
    DOI: 10.1016/j.jcorpfin.2017.09.011
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    More about this item

    Keywords

    Listed private equity; IPO; Earnings management;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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