【Abstract】

This paper examines the impact of institutional ownership on the performance of private equity placements (PEPs) in Chinese listed firms. We found that the presence of institutional investors can alleviate the information asymmetries between listed firms and the market. The participation of institutional investors in PEPs is followed by an improvement of firms’ long-term performances. Moreover, independent institutional investors can better predict the long-term performance of PEPs. Finally, the paper also found that institutional investors are more effective in monitoring corporate insiders in non-state owned firms than in state-owned firms.

【Keywords】

institutional ownership, private equity placements, information asymmetry

【Authors】

He Qing, Senior Research Fellow of IMI, Professor of School of Finance, Renmin University of China

Li Dongxu, Department of Finance, Ohio State University

Lu Liping, Department of Finance, VU University Amsterdam

Terence Tai Leung Chong, Department of Economics, Chinese University of Hong Kong