NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors

Sharon Katz

NBER Working Paper No. 14085
Issued in June 2008
NBER Program(s):   CF

This study explores how firms' ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PE-backed firms). The findings indicate that PE-backed firms generally have higher earnings quality than those that do not have PE sponsorship, engage less in earnings management and report more conservatively both before and after the IPO. Further, PE-backed firms that are majority-owned by PE sponsors exhibit superior long-term stock price performance after they go public. These results stem from the professional ownership, tighter monitoring, and reputational considerations exhibited by PE sponsors.

download in pdf format
   (275 K)

email paper

This paper is available as PDF (275 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14085

Published: Title: Earnings quality and ownership structure: the role of private equity sponsors Author(s): Katz S P Journal: The Accounting Review, May 2009, Volume: 84 Issue: 3 pp.623-658 (36 pages) Issn: 0001-4826

Users who downloaded this paper also downloaded these:
Chan, Chan, Jegadeesh, and Lakonishok w8308 Earnings Quality and Stock Returns
Bernstein, Lerner, Sorensen, and Stromberg w15632 Private Equity and Industry Performance
Moskowitz and Vissing-Jorgensen w8876 The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?
Kaplan and Stromberg w14207 Leveraged Buyouts and Private Equity
Lerner, Sorensen, and Stromberg w14623 Private Equity and Long-Run Investment: The Case of Innovation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us