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Minority and majority private equity investments: firm performance and governance

Erich Battistin (), Paolo Bortoluzzi (), Fabio Buttignon () and Marco Vedovato
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Paolo Bortoluzzi: University of Padua
Fabio Buttignon: University of Padua

Journal of Management & Governance, 2017, vol. 21, issue 3, No 5, 659-684

Abstract: Abstract This paper adds to the literature on the determinants of the effects of private equity (PE) investments. Using an original dataset of 191 target firms in Italy, we study the effects on performance and governance of the stakes acquired by the PE investor. We employ a difference-in-differences approach and compare target and control firms sharing similar characteristics and performance in the years preceding the deal. We find that PE investment has a positive effect on profitability, sales, and employment; these effects are larger for minority investments. We argue that this signals effective governance that follows from complementing rather than substituting incumbent managers in minority investments.

Keywords: Private equity; Minority investment; Family firm; Firm performance; Corporate governance (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10997-016-9364-2

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