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Financial reporting quality in private equity backed companies: the impact of ownership concentration
Beuselinck, Christof Manigart, Sophie
Beuselinck, Christof
Manigart, Sophie
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Publication Type
Working paper
Editor
Supervisor
Publication Year
2005
Journal
Book
Publication Volume
Publication Issue
23
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Publication End page
Publication NUmber of pages
23
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Abstract
We argue and empirically show on a sample of 270 unquoted, private equity backed companies that the shareholder structure of private companies influences the quality of their accounting information. We show that companies in which private equity (PE) investors have a higher equity stake produce accounting information that is of lower quality than companies in which PE investors have a lower equity stake, controlling for company size and age. We argue that this is evidence that a large equity stake is a substitute for high earnings quality.
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Keywords
Corporate Finance, Mergers & Acquisitions