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The institutional determinants of private equity involvement in business groups—the case of Africa

The institutional determinants of private equity involvement in business groups—the case of Africa
The institutional determinants of private equity involvement in business groups—the case of Africa

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African economies. We adopt an actor centered institutional-theoretic perspective in rationalizing institutional voids and the advantages of maintained governance by both business angels (BA) and venture capital (VC) private equity. Our findings reveal private equity retain higher post-IPO ownership in business group constituents compared to unaffiliated firms and that this is inversely moderated in the context of improving institutional quality – where this is particularly strong in case of foreign VC as opposed to domestic VC or BA. Our result adds to the literature on multifocal corporate governance mechanisms and the institutional determinants of private equity investment.

Africa, Business angel, Business group, Institutional voids, IPO, Ownership structure, Property rights protection, Venture capital
1090-9516
118-133
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Oxelheim, Lars
2779fed2-36f3-4c53-8419-629fffd61ffc
Randøy, Trond
5c347a43-8b02-4477-ad5c-18adc1098926
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Oxelheim, Lars
2779fed2-36f3-4c53-8419-629fffd61ffc
Randøy, Trond
5c347a43-8b02-4477-ad5c-18adc1098926

Hearn, Bruce, Oxelheim, Lars and Randøy, Trond (2018) The institutional determinants of private equity involvement in business groups—the case of Africa. Journal of World Business, 53 (2), 118-133. (doi:10.1016/j.jwb.2016.02.002).

Record type: Article

Abstract

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African economies. We adopt an actor centered institutional-theoretic perspective in rationalizing institutional voids and the advantages of maintained governance by both business angels (BA) and venture capital (VC) private equity. Our findings reveal private equity retain higher post-IPO ownership in business group constituents compared to unaffiliated firms and that this is inversely moderated in the context of improving institutional quality – where this is particularly strong in case of foreign VC as opposed to domestic VC or BA. Our result adds to the literature on multifocal corporate governance mechanisms and the institutional determinants of private equity investment.

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More information

Accepted/In Press date: 11 February 2016
e-pub ahead of print date: 26 February 2016
Published date: 2 February 2018
Keywords: Africa, Business angel, Business group, Institutional voids, IPO, Ownership structure, Property rights protection, Venture capital

Identifiers

Local EPrints ID: 424188
URI: https://eprints.soton.ac.uk/id/eprint/424188
ISSN: 1090-9516
PURE UUID: daf19c32-ab53-4ce9-9b9d-94f63726c7df
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

Catalogue record

Date deposited: 05 Oct 2018 11:34
Last modified: 10 Dec 2019 01:23

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