Legal Protection, Corruption and Private Equity Returns in Asia

Journal of Business Ethics 95 (S2):173 - 193 (2010)
  Copy   BIBTEX

Abstract

This article examines how private equity returns in Asia are related to levels of legal protection and corruption. We utilize a unique data set comprising over 750 returns to private equity transactions across 20 developing and developed countries in Asia. The data indicate that legal protections are an important determinant of private equity returns in Asia, but also that private equity managers are able to mitigate the potential for corruption. The quality of legal system (including legal protections) is positively related to returns. Inefficient legal protections negatively impact transaction structures and economic certainty when exiting investments. We also find that private equity managers, irrespective of the quality of legal system they are operating within, can mitigate the potential impact of corruption. Private equity returns are higher in countries with higher levels of corruption, controlling for legal systems. This finding is consistent with the view that private equity managers bring about organizational change to alleviate the costs of corruption. Our findings are robust to inclusion of controls for Hofstede cultural variables, economic conditions, and transaction specific characteristics, as well as consideration of econometric sample selection methods for unexited investments

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 90,593

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

Private-to-private corruption.Antonio Argandoña - 2003 - Journal of Business Ethics 47 (3):253 - 267.
Private Equity and the Public Good.Kevin Morrell & Ian Clark - 2010 - Journal of Business Ethics 96 (2):249 - 263.
Private Equity Investments.Duane Windsor - 2009 - Proceedings of the International Association for Business and Society 20:278-289.
Equity and Contemporary Legal Developments: Papers Presented at the First International Conference on Equity, the Faculty of Law, the Hebrew University of Jerusalem, June 1990.Stephen R. Goldstein (ed.) - 1992 - Harry and Michael Sacher Institute for Legislative Research and Comparative Law, the Hebrew University of Jerusalem.
NYSE sector returns and political cycles.R. Bruce Swensen & Jayen B. Patel - 2004 - Journal of Business Ethics 49 (4):387-395.

Analytics

Added to PP
2013-09-29

Downloads
30 (#459,346)

6 months
2 (#668,348)

Historical graph of downloads
How can I increase my downloads?