Size matters: Unpacking the relationship between institutional investor size and private equity asset allocation within diverse institutional contexts

Douglas Cumming, Muhammad Zubair Khan, Naimat U. Khan and Zafir Ullah Khan

Journal of International Financial Markets, Institutions and Money, 2024, vol. 92, issue C

Abstract: This study examines the relationship between institutional investors’ size and their inclination towards private equity investments, hypothesizing a U-shaped pattern. It also explores how this relationship is influenced by the institutional context. Using a dataset of 5668 firms across 52 countries from 1991 to 2017, we observe that small and large institutional investors exhibit a stronger preference for private equity compared to intermediate-sized counterparts. Smaller investors show heightened interest in private equity within favorable contexts, while larger investors pursue such opportunities in unfavorable contexts. Our research offers valuable insights for policymakers and investors of diffferent sizes making private equity investments in diverse institutional contexts.

Keywords: Firm size; Institutional investors; Private equity; Asset allocation; Legal institutions (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:92:y:2024:i:c:s1042443124000246

DOI: 10.1016/j.intfin.2024.101958

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