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Corporate Governance and Value Creation: Evidence from Private Equity

Author

Listed:
  • Oliver Gottschalg

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Viral V. Acharya

    (Center for Economic Research - CEPR, NYU Stern - Leonard N. Stern School of Business - NYU - New York University [New York] - NYU - NYU System, NBER - The National Bureau of Economic Research)

  • Moritz Hahn

    (Department of Economics - LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München)

  • Conor Kehoe

Abstract

Using deal-level data from transactions initiated by large private equity houses, we find that the abnormal performance of deals is positive on average, after controlling for leverage and sector returns. Higher abnormal performance is related to improvement in sales and operating margin during the private phase, relative to that for quoted peers. General partners who are ex-consultants or ex-industry managers are associated with outperforming deals focused on internal value-creation programs, and ex-bankers or ex-accountants with outperforming deals involving significant mergers and acquisitions. The findings suggest the presence, on average, of positive but heterogeneous skills at the deal-partner level in large private equity transactions.

Suggested Citation

  • Oliver Gottschalg & Viral V. Acharya & Moritz Hahn & Conor Kehoe, 2013. "Corporate Governance and Value Creation: Evidence from Private Equity," Post-Print hal-00784067, HAL.
    • Handle: RePEc:hal:journl:hal-00784067
    DOI: 10.1093/rfs/hhs117
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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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