Private equity investments and disclosure policy

Christof Beuselinck, M. Deloof and Sophie Manigart

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

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.

Keywords: Disclosure; private equity; unlisted firms; monitoring; corporate governance Note (search for similar items in EconPapers)
JEL-codes: G30 M10 M41 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005-02-14
New Economics Papers: this item is included in nep-ent
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Related works:
Journal Article: Private Equity Investments and Disclosure Policy (2008)
Working Paper: Private Equity Investments and Disclosure Policy (2008)
Working Paper: Private Equity Investments and Disclosure Policy (2005)
Working Paper: Private equity investments and disclosure policy (2004)
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