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Performance Benefits of Tight Control

Source:
The Journal of Private Equity, Vol. 18, Issue 3, pp.41-54
Year:
2015
Authors:
Andrej Gill,
Nikolai Visnjic
Reseach Area:
Corporate Finance, Transparency Lab
Abstract:

This study investigates the transition from being a listed company with a dispersed ownership structure to being a privately held company with a concentrated ownership structure. We consider a sample of private equity backed portfolio companies to evaluate the consequences of the corporate governance changes on operational performance. Our analysis shows significant positive abnormal growth in several performance ratios for the private period of our sample companies relative to comparable public companies. These performance differences come from the increase in ownership concentration after the leveraged buyout transaction.

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