Does ownership matter in private equity? The sources of variance in buyouts' performance

Castellaneta, Francesco; Gottschalg, Oliver

doi:10.1002/smj.2336

Cited by 35 publications

(31 citation statements)

References 96 publications

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“…Therefore, following previous studies (e.g. Bromiley and Harris, ; Castellaneta and Gottschalg, ), we managed outliers by winsorizing (see Wilcox, ) at 4% (2% from the bottom and 2% from the top) and so run Tobit regressions with winsorized variables.…”

Section: Methods and Datamentioning

confidence: 99%

Firm Environmental Performance under Scrutiny: The Role of Strategic and Organizational Orientations

Ardito

Dangelico

2018

Corp Soc Responsibility Env

131

104

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Reducing firm environmental burden is not easy. Thus, several studies have investigated the antecedents of good firm environmental performance; however, they provide contrasting results, focus on specific categories of antecedents, and often rely on subjective performance measures. This study overcomes these gaps by jointly considering the effects of different firm strategic and organizational orientations on several dimensions of environmental performance, objectively measured. Through the analysis of 269 large global companies included in the Newsweek Green Ranking 2014 1 , we found that: both market and environmental management orientations have a positive effect on carbon, energy, and water productivity; green supply chain management orientation has a positive influence on waste and water productivity; and technology orientation negatively affects carbon and waste productivity. Based on these findings, we advise managers that strategic and organizational orientations do not affect all types of environmental performance in the same way, thus calling for caution when they are designed for environmentally friendly purposes.

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Section: Methods and Datamentioning

confidence: 99%

Firm Environmental Performance under Scrutiny: The Role of Strategic and Organizational Orientations

Ardito

Dangelico

2018

Corp Soc Responsibility Env

131

104

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“…The IRR measures the target firm's percentage change in market value in any period, discounting any future cash flow by the IRR itself (Bodie, Kane, and Marcus, ). Consistent with prior literature (Castellaneta and Gottschalg, ; Castellaneta and Zollo, ; Lopez de Silanes, Phalippou, and Gottschalg, ), we censor the distribution to account for the outliers (defined as observations three standard deviations above and below the mean).…”

Section: Research Setting and Designmentioning

confidence: 99%

Money secrets: How does trade secret legal protection affect firm market value? Evidence from the uniform trade secret act

Castellaneta

Conti

Kacperczyk³

2016

Strategic Management Journal

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Research summary:We investigate the impact of trade secret legal protection on firm market value in the context of acquisitions. On one hand, market value may increase because trade secret assets become better protected from rivals. On the other hand, market value may decrease because trade secret protection reduces information about the target and its competitors available to potential buyers, increasing uncertainty about its value. Buyers will discount their offers in expectation of being compensated for riskier deals. Using a sample of private equity investments in the United States, we find that trade secret protection has a positive effect in industries with high mobility of knowledge workers, but a negative effect in industries with (1) high resource-value uncertainty and (2) high poor-investment risk. Managerial summary:We argue that an increase in trade secret legal protection might not unequivocally benefit firm owners when selling their business. A stronger trade secret protection increases the market value of firms in industries with high workers' mobility, but it decreases the market value of firms in industries with uncertain resource value and/or high risk of poor-acquisition investments. Based on the contingent effect of trade secret protection, companies may want to adjust their strategic decisions, including where to locate or relocate, based in part on whether they will derive benefits or suffer losses when trade secrets are better protected. Finally, our study should help policymakers understand more fully the economic impact of government policies associated with trade secrets.

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“…Specifically, we document that acquirer signals can be important in assuring external capital providers that a proposed transaction is value enhancing. We further contribute to the literature on corporate effects in M&A by highlighting a “PE effect” (e.g., Castellaneta and Gottschalg, ), as well as the factors that moderate this effect. This extends work by Ferreira, Massa, and Matos () who show that other institutional investors can have similar effects in overcoming information problems in cross‐border M&A.…”

Section: Discussionmentioning

confidence: 91%

Cross‐border mergers and acquisitions: The role of private equity firms

Humphery‐Jenner

Sautner

Suchard

2017

Strategic Management Journal

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Research summary: We show that private equity ownership (“PE backing”) of the acquirer is a signal of deal quality in cross‐border takeovers. As such, PE‐backed acquirers experience higher announcement returns in cross‐border takeovers, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms' experience and networks that result from prior deals in target countries. We document that the market correctly anticipates that operating performance of PE‐backed acquirers increases as a result of cross‐border mergers and acquisitions (M&A). Managerial summary: We study cross‐border acquisitions by acquirers that are partially owned by private equity firms (“PE backing”). Cross‐border acquisitions are challenging as acquirers often have little information about targets. We document that investors react positively to cross‐border deals of PE‐backed acquirers—their stock prices increase upon deal announcements. However, this is only the case if targets are in countries with poor information environments. This is because PE backing allows acquirers to access PE firms' deal experience and networks. This makes it easier to identify and evaluate good targets, making it more (less) likely that a deal eventually creates (destroys) value. Consistent with this, we find that earnings of PE‐backed acquirers increase after buying targets in poor information environments. Copyright © 2016 John Wiley & Sons, Ltd.

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Does ownership matter in private equity? The sources of variance in buyouts' performance

Cited by 35 publications

References 96 publications

Firm Environmental Performance under Scrutiny: The Role of Strategic and Organizational Orientations

Firm Environmental Performance under Scrutiny: The Role of Strategic and Organizational Orientations

Money secrets: How does trade secret legal protection affect firm market value? Evidence from the uniform trade secret act

Cross‐border mergers and acquisitions: The role of private equity firms

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