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Private equity investments and disclosure policy

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  • BEUSELINCK, Christophe
  • DELOOF, Marc
  • MANIGART, Sophie

Abstract

We investigate whether a firm’s disclosure policy is affected by the changing corporate setting and intensified corporate governance associated with private equity (PE) investments. For a unique sample of unquoted PE backed firms we observe a significant switch to increased financial disclosure in the pre-investment year, consistent with the hypothesis that entrepreneurs attempt to reduce information asymmetries inherent to the PE application by increasing their disclosure levels. Further, we document that the governance and professionalization impact of PE investors affects their portfolio firms’ financial disclosure positively. Finally, differentiating on investor type (government versus non-government related) reveals no overall effect on disclosure, both in the pre- as in the post-investment years. Results are robust to various sensitivity checks.

Suggested Citation

  • BEUSELINCK, Christophe & DELOOF, Marc & MANIGART, Sophie, 2004. "Private equity investments and disclosure policy," Working Papers 2004025, University of Antwerp, Faculty of Applied Economics.
  • Handle: RePEc:ant:wpaper:2004025
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    References listed on IDEAS

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    1. Mitchell Berlin, 1998. "That thing venture capitalist do," Business Review, Federal Reserve Bank of Philadelphia, issue Jan, pages 15-26.
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    Cited by:

    1. Christof Beuselinck & Marc Deloof & Sophie Manigart, 2009. "Private Equity Involvement and Earnings Quality," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(5-6), pages 587-615.
    2. Tom Caneghem & Geert Campenhout, 2012. "Quantity and quality of information and SME financial structure," Small Business Economics, Springer, vol. 39(2), pages 341-358, September.
    3. McKenzie, Michael & Satchell, Stephen & Wongwachara, Warapong, 2012. "Nonlinearity and smoothing in venture capital performance data," Journal of Empirical Finance, Elsevier, vol. 19(5), pages 782-795.
    4. Leonel Arango Vásquez & Eduardo Alexander Duque Grisales & Germán Horacio Cardona Vélez, 2014. "La teoría de la agencia en la industria del capital riesgo: mecanismos de alineación de intereses," ESCENARIOS: EMPRESAS Y TERRITORIO, INSTITUCION UNIVERSITARIA ESUMER, January.
    5. Malafronte, Irma & Porzio, Claudio & Starita, Maria Grazia, 2016. "The nature and determinants of disclosure practices in the insurance industry: Evidence from European insurers," International Review of Financial Analysis, Elsevier, vol. 45(C), pages 367-382.

    More about this item

    Keywords

    Disclosure; Private equity; Unlisted firms; Monitoring; Corporate governance;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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