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Private equity investments and disclosure policy
Beuselinck, Christof Deloof, Marc Manigart, Sophie
Beuselinck, Christof
Deloof, Marc
Manigart, Sophie
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Publication Type
Working paper
Editor
Supervisor
Publication Year
2005
Journal
Book
Publication Volume
Publication Issue
1
Publication Begin page
Publication End page
Publication NUmber of pages
47
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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.
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Keywords
Corporate Finance, Disclosure, Private Equity, Unlisted Firms, Monitoring, Corporate Governance