I examine the relationship between managerial ownership and operational performance for firms acquired in a buyout. I show that high post-buyout CEO ownership stakes are associated with improved firm profitability. This result is economically stronger for changes in ownership stakes, and is solely present when the CEO is retained. Ownership stakes are higher when initial profitability is low and is associated with cost cutting. Overall, the results support the view that improving managerial incentives is an important part of value creation in buyouts.
{"title":"Managerial Ownership and Operational Improvements in Buyouts","authors":"John B. Cassel","doi":"10.2139/ssrn.3934568","DOIUrl":"https://doi.org/10.2139/ssrn.3934568","url":null,"abstract":"I examine the relationship between managerial ownership and operational performance for firms acquired in a buyout. I show that high post-buyout CEO ownership stakes are associated with improved firm profitability. This result is economically stronger for changes in ownership stakes, and is solely present when the CEO is retained. Ownership stakes are higher when initial profitability is low and is associated with cost cutting. Overall, the results support the view that improving managerial incentives is an important part of value creation in buyouts.","PeriodicalId":198413,"journal":{"name":"CGN: Private Equity Firms as Investors (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133992206","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The existing domestic literatures in China on the type of private equity placements’ investors has been still classified by the criteria that if it is the controlling shareholders or not. This paper attempts to bridge the gap in the existing literatures, takes the way that the investors impacts on corporate governance as criteria for the classification, and thus classifies the private equity placements object to study the impact of the private equity placements object on company performance. The empirical analysis concludes that: first, the placements to the controlling shareholders has a negative impact on firm performance; second, related party transactions between the enterprise and their shareholders can improve the value of the company; Finally, the placements to the outside investors has a positive impact on corporate performance, but the institutional investors because of their negative attitude to corporate governance cause a slight negative impact on firm performance.
{"title":"Research for the Influence of the Investors’ Types in Private Placements of China's A-Share Listed Companies on their Performance","authors":"Y. Qiu, Yingchun Song","doi":"10.2139/ssrn.2208489","DOIUrl":"https://doi.org/10.2139/ssrn.2208489","url":null,"abstract":"The existing domestic literatures in China on the type of private equity placements’ investors has been still classified by the criteria that if it is the controlling shareholders or not. This paper attempts to bridge the gap in the existing literatures, takes the way that the investors impacts on corporate governance as criteria for the classification, and thus classifies the private equity placements object to study the impact of the private equity placements object on company performance. The empirical analysis concludes that: first, the placements to the controlling shareholders has a negative impact on firm performance; second, related party transactions between the enterprise and their shareholders can improve the value of the company; Finally, the placements to the outside investors has a positive impact on corporate performance, but the institutional investors because of their negative attitude to corporate governance cause a slight negative impact on firm performance.","PeriodicalId":198413,"journal":{"name":"CGN: Private Equity Firms as Investors (Sub-Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125501644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes how the affiliation of a venture capital firm affects the deal terms for innovative entrepreneurial ventures. We develop a theory to explain the advantages of independent and bank-affiliated venture capital funds for entrepreneurs. We assume that independent venture capital firms provide better support quality while bank-affiliated firms are less financially constrained. The entrepreneur selects the optimal contract by trading-off these characteristics. The model allows several empirically testable predictions concerning the nature of projects financed by either type of venture capital firm. Entrepreneurs should seek capital from independent or affiliated venture capitalists contingent on the degree of sophistication of their project, their liquidation value, the importance of expected management support, and the remaining time to fundraising.
{"title":"Entrepreneurs' Financing Choice Between Independent or Bank-Affiliated Venture Capital Firms","authors":"G. Andrieu, Alexander Groh","doi":"10.2139/ssrn.1191222","DOIUrl":"https://doi.org/10.2139/ssrn.1191222","url":null,"abstract":"This paper analyzes how the affiliation of a venture capital firm affects the deal terms for innovative entrepreneurial ventures. We develop a theory to explain the advantages of independent and bank-affiliated venture capital funds for entrepreneurs. We assume that independent venture capital firms provide better support quality while bank-affiliated firms are less financially constrained. The entrepreneur selects the optimal contract by trading-off these characteristics. The model allows several empirically testable predictions concerning the nature of projects financed by either type of venture capital firm. Entrepreneurs should seek capital from independent or affiliated venture capitalists contingent on the degree of sophistication of their project, their liquidation value, the importance of expected management support, and the remaining time to fundraising.","PeriodicalId":198413,"journal":{"name":"CGN: Private Equity Firms as Investors (Sub-Topic)","volume":"131 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121914958","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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