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Private equity in China and in Europe: an institutional comparative study

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  • Xieshu Wang

Abstract

Investments by funds in the equity of non listed companies represent a particular activity of capitalism of the 21st Century. This study provides an analysis of the development and the characteristics of private equity funds operating in China. It applies the framework of institutional theory using a multi-disciplinary approach and compare Chinese, French and British funds. Our analysis suggests that private equity in China is characterized by a stronger influence of the Chinese state, an extensive impact of guanxi, a more diverse use of information sources, a more limited choice of financial tools and the preference of Chinese entrepreneurs to keep control of their firms. Our econometric study also indicates that the rigidity of labor market, economic openness and taxation on company profits have the greatest impact on the activity of all funds. In comparison with France, the UK and the US, China has stronger coefficients regarding GDP growth, household consumption growth, political stability and infrastructure.

Suggested Citation

  • Xieshu Wang, 2016. "Private equity in China and in Europe: an institutional comparative study," CEPN Working Papers 2016-11, Centre d'Economie de l'Université de Paris Nord.
    • Handle: RePEc:upn:wpaper:2016-11
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    Keywords

    Private equity; China; Europe;
    All these keywords.

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