Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1082: The Institutional Determinants of Private Equity Involvement in Business Groups: The Case of Africa

Bruce Hearn , Lars Oxelheim () and Trond Randøy
Additional contact information
Bruce Hearn: Sussex University
Lars Oxelheim: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden, and Lund University
Trond Randøy: Agder University

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 centred 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. Our result adds to the literature on multifocal corporate governance mechanisms.

Keywords: G10; G30; G32; G34; G38; K00

JEL-codes: G10; G30; G32; G34; G38; K00

46 pages, September 8, 2015

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