| Author: | Nielsen, K.M. |
| Title: | Institutional investors and private equity |
| Journal: | Review of finance
2008 : VOL. 12:1, p. 185-219 |
| Index terms: | finance investment institutional investors equities funds |
| Freeterms: | ownership |
| Language: | eng |
| Abstract: | Based on entrepreneurial finance literature institutional investors (hereafter as: i-invsts.) are the main contributors to private equity (here as: p-eqty.) funds. This paper complements the findings by documenting that i-invsts. also invest directly in p-eqty. For such investments, a major concern is the higher agency costs associated with p-eqty. Institutions are shown to invest in private firms with governance mechanisms (as: gov-mcms.) tending to reduce the expected agency costs and risk of minority expropriation. Furthermore, good gov-mcms. allow i-invsts. to enjoy the benefits of syndication, thereby reducing idiosyncratic risk etc. |
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