Benefits of public reporting: Evidence from IPOs backed by listed private equity firms

M. Sinan Goktan and Volkan Muslu

Journal of Corporate Finance, 2018, vol. 50, issue C, 669-688

Abstract: Private equity firms that are listed on stock exchanges commit to extensive public disclosures. By contrast, unlisted private equity firms communicate privately with partner investors. We examine the reporting quality of portfolio companies that are backed by listed and unlisted private equity firms worldwide. We find that portfolio companies that are backed by listed private equity firms report lower abnormal accruals, recognize losses faster, and experience higher post-IPO stock returns. These findings are stronger for smaller and European portfolio companies and those that receive direct private equity investments. Overall, our findings suggest that the public reporting model of listed private equity firms leads to greater capital market benefits than the private reporting model of unlisted private equity firms.

Keywords: Listed private equity; IPO; Earnings management (search for similar items in EconPapers)
JEL-codes: D80 G24 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:50:y:2018:i:c:p:669-688

DOI: 10.1016/j.jcorpfin.2017.09.011

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