Abstract
This paper examines the impact of institutional ownership on the performance of private equity placements (PEPs) for listed firms in China. We find that the presence of institutional investors can alleviate the information asymmetries between listed firms and the market. The market reaction to PEP announcements is significantly smaller if there is a higher portion of institutional shareholdings. Long-term firm operational performance after PEPs is positively correlated with institutional shareholdings. Moreover, we find that the relationship between institutional shareholdings and PEP performance is mainly driven by nonlisted corporate investors and mutual funds. Finally, the relationship between PEP performance and institutional shareholdings is stronger in smaller PEP issuers.
| Original language | English |
|---|---|
| Pages (from-to) | 315-346 |
| Number of pages | 32 |
| Journal | International Review of Finance |
| Volume | 19 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Jun 2019 |
Funding
* We would like to thank Julan Du for his helpful comments. This paper is supported by the MOE Project of Key Research Institute of Humanities and Social Sciences at Universities (No. 16JJD790056), National Natural Science Foundation of China (Nos. 71402181 and 71603225), National Social Science Foundation of China (No. 15ZDA027), the Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin University of China (No. 13XNJ003).
| Funders | Funder number |
|---|---|
| MOE Project of Key Research Institute of Humanities and Social Sciences at Universities | 16JJD790056 |
| National Social Science Foundation of China | 15ZDA027 |
| National Natural Science Foundation of China | 71603225, 71402181 |
| Renmin University of China | 13XNJ003 |
| Fundamental Research Funds for the Central Universities |
