Equity

Distribution by Scientific Domains
Distribution within Business, Economics, Finance and Accounting

Kinds of Equity

  • brand equity
  • gender equity
  • greater equity
  • health equity
  • horizontal equity
  • intergenerational equity
  • private equity
  • social equity

  • Terms modified by Equity

  • equity capital
  • equity consideration
  • equity firm
  • equity fund
  • equity incentive
  • equity index
  • equity investment
  • equity investor
  • equity issues
  • equity joint venture
  • equity market
  • equity mutual fund
  • equity offer
  • equity offering
  • equity option
  • equity ownership
  • equity portfolios
  • equity position
  • equity premium
  • equity price
  • equity return
  • equity risk
  • equity risk premium
  • equity theory
  • equity trade
  • equity valuation
  • equity value
  • equity volatility

  • Selected Abstracts


    THE PRACTICE OF HIGHER EDUCATION: IN PURSUIT OF EXCELLENCE AND OF EQUITY

    EDUCATIONAL THEORY, Issue 4 2006
    David Bridges
    He considers whether some of the changes in practices linked to the massification of higher education have in fact resulted in the breakdown of higher education as a practice, at least on Alasdair MacIntyre's definition of the term. Specifically, Bridges examines whether higher education has lost its sense of the forms of human excellence around which its life is constructed. Finally, he points to issues of equity raised by the huge variety of forms that higher education now takes and asks whether this variety might mean that students are winning entry to some very different qualities of experience when judged against the requirement that they should contribute to the development of human excellence. [source]


    TRANSFERABLE STOCK OPTIONS (TSOS) AND THE COMING REVOLUTION IN EQUITY-BASED PAY

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 1 2004
    Brian J. Hall
    The dominant form of equity pay in the U.S. will change dramatically when accounting rules are changed (most likely in 2005) to require companies to charge the cost of their stock option plans on their income statements. Many companies are already switching from stock options to other forms of equity pay, especially restricted stock. The most notable switcher was Microsoft, the world's largest user of stock option pay. In July 2003, partnering with J.P. Morgan, Microsoft created a onetime transferable stock option (TSO) program that allowed holders of underwater Microsoft options to sell their options to J.P. Morgan in return for restricted shares. But the most important consequence of this transaction may not be a widespread shift by corporate America to restricted shares, but rather the creation of a more costeffective kind of stock option. By clearing the potentially messy hurdles involving taxes, accounting, SEC rules, and "transaction mechanics," Microsoft has opened the door for TSOs to be considered as an ongoing equitypay instrument, perhaps replacing standard stock options (which are not transferable). TSOs share the key advantages of restricted stock in terms of providing robust retention and ownership incentives and higher valuecost efficiency, while maintaining the key "leverage" advantage of options. In so doing, they create significant upside (and downside) while largely avoiding the "pay for pulse" problem of restricted stock. They also introduce the discipline of competitive pricing by third-party bidders. The bid prices of investment banks create nearly all of the information required for accurate estimates of option cost, which should foster greater board accountability and improved corporate governance. [source]


    SIX CHALLENGES IN DESIGNING EQUITY-BASED PAY

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2003
    Brian J. Hall
    The past two decades have seen a dramatic increase in the equitybased pay of U.S. corporate executives, an increase that has been driven almost entirely by the explosion of stock option grants. When properly designed, equity-based pay can raise corporate productivity and shareholder value by helping companies attract, motivate, and retain talented managers. But there are good reasons to question whether the current forms of U.S. equity pay are optimal. In many cases, substantial stock and option payoffs to top executives,particularly those who cashed out much of their holdings near the top of the market,appear to have come at the expense of their shareholders, generating considerable skepticism about not just executive pay practices, but the overall quality of U.S. corporate governance. At the same time, many companies that have experienced sharp stock price declines are now struggling with the problem of retaining employees holding lots of deep-underwater options. This article discusses the design of equity-based pay plans that aim to motivate sustainable, or long-run, value creation. As a first step, the author recommends the use of longer vesting periods and other requirements on executive stock and option holdings, both to limit managers' ability to "time" the market and to reduce their incentives to take shortsighted actions that increase near-term earnings at the expense of longer-term cash flow. Besides requiring "more permanent" holdings, the author also proposes a change in how stock options are issued. In place of popular "fixed value" plans that adjust the number of options awarded each year to reflect changes in the share price (and that effectively reward management for poor performance by granting more options when the price falls, and fewer when it rises), the author recommends the use of "fixed number" plans that avoid this unintended distortion of incentives. As the author also notes, there is considerable confusion about the real economic cost of options relative to stock. Part of the confusion stems, of course, from current GAAP accounting, which allows companies to report the issuance of at-the-money options as costless and so creates a bias against stock and other forms of compensation. But, coming on top of the "opportunity cost" of executive stock options to the company's shareholders, there is another, potentially significant cost of options (and, to a lesser extent, stock) that arises from the propensity of executives and employees to place a lower value on company stock and options than well-diversified outside investors. The author's conclusion is that grants of (slow-vesting) stock are likely to have at least three significant advantages over employee stock options: ,they are more highly valued by executives and employees (per dollar of cost to shareholders); ,they continue to provide reasonably strong ownership incentives and retention power, regardless of whether the stock price rises or falls, because they don't go underwater; and ,the value of such grants is much more transparent to stockholders, employees, and the press. [source]


    RETURNS TO EQUITY, INVESTMENT AND Q: EVIDENCE FROM THE UK

    THE MANCHESTER SCHOOL, Issue 2005
    SIMON PRICE
    Conventional wisdom has it that Tobin's Q cannot help explain aggregate investment. However, the standard linearized present-value asset price decomposition suggests that it should be able to predict other variables, such as stock returns. Using a new data set for the UK, we find that Q has strong predictive power for debt accumulation, stock returns and UK business investment. The correctly signed results on both returns and investment appear to be robust, and are supported by the commonly used and bootstrapped standard error corrections, as well as recently developed asymptotic corrections. [source]


    Momentum investing and the asset allocation decision

    ACCOUNTING & FINANCE, Issue 4 2007
    Karen L. Benson
    G23 Abstract This study examines the active asset allocation decisions of Australian multisector fund managers to determine whether active fund managers engage in momentum strategies. We find evidence supporting the existence of momentum investing in active asset allocation strategies. This evidence exists in the Australian Equities, Australian Fixed Interest and Listed Property asset classes. Interestingly, balanced funds adopt contrarian strategies in the International Equities asset class. We also examine whether there is any association between a fund's market timing skill and the execution of momentum strategies. Our results show that fund managers with no market timing skill are momentum investors. [source]


    Cultivating Creative Equity in Scandinavian Design Brands

    DESIGN MANAGEMENT REVIEW, Issue 3 2010
    Oscar Person
    Scandinavia is famous throughout the world for its design savvy. But the flip side of this enviable situation is the inevitable commoditization of design. How do companies like Marimekko and Kosta Boda manage to hang on to their premium brands? The answer: creative equity. [source]


    Equity-Based, Asset-Based and Asset-Backed Transactional Structures in Shari'a -Compliant Financing: Reflections on the Current Financial Crisis,

    ECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 3 2009
    Razi Pahlavi Abdul Aziz
    F33; G21; P45; P49 This paper presents interest-free equity-based, asset-based and asset-backed transactional structures endorsed by Shari'a -compliant finance. These structures could explain the potential and relative insulation, yet not immunity, of Islamic financial institutions from the financial crisis. Although Shari'a -compliant financing cannot solve the current financial crisis, the recovering market could consider incorporating some of the insulating principles underlying Shari'a -compliant financing and securitization products, as exemplified in the sample of Shari'a -compliant products in this paper, so as to offer better consumer protection. [source]


    Who Withdraws Housing Equity and Why?

    ECONOMICA, Issue 301 2009
    ANDREW BENITO
    The decision to extract home equity is examined using household-level data for the UK over 1993,2003. At its peak during the period, around 1-in-10 homeowners withdraw equity per year. Little is known about this financial decision. I find that the equity withdrawal decision conforms to predictions from the standard life-cycle framework and models that predict its use as a financial buffer. The paper also estimates responses to the large house price appreciation and significant reductions in mortgage rates seen during the period. [source]


    The Agency Costs of Overvalued Equity and the Current State of Corporate Finance

    EUROPEAN FINANCIAL MANAGEMENT, Issue 4 2004
    Michael C. Jensen
    First page of article [source]


    Why Do Firms Issue Equity after Splitting Stocks?

    FINANCIAL REVIEW, Issue 3 2003
    Ranjan D'Mello
    G14/G30/G32 Abstract This paper examines the motivations of firms that conduct seasoned equity offerings (SEOs) after splitting stocks. We find no difference in equity announcement and issue period returns between these firms and other equity-issuing firms, suggesting that firms do not split stocks to reveal information and reduce adverse selection costs at the subsequent SEO. However, because investors react positively to split announcements, firms that issue equity after splitting stocks sell new shares at a higher price and raise more funds. We also find that firms split stocks to make the subsequent SEO more marketable to individual investors who are attracted to low-priced shares. [source]


    Entering the Twilight Zone: The Local Complexities of Pay and Employment Equity in New Zealand

    GENDER, WORK & ORGANISATION, Issue 5 2009
    Deborah Jones
    This article introduces the recent pay and employment equity situation in the New Zealand state sector through a discussion of research carried out for a Pay and Employment Equity Taskforce. It investigates the twilight zone of pay and employment equity , the murky situations where pay and employment equity programmes already exist, but progress for senior women has stalled for no obvious reasons. Qualitative research is necessary to make sense of these complex situations and to complement labour-market level studies. The example used is a study of teachers in New Zealand schools, where a range of complex reasons, including lack of support, gendered job designs and intense workloads, creates a bottleneck for women at senior levels. The authors argue that highly decentralized human resources practices work against progress in equal employment opportunity in the state sector. [source]


    Exploring the Gaps between Meanings and Practices of Gender Equity in a Sport Organization

    GENDER, WORK & ORGANISATION, Issue 3 2007
    Larena Hoeber
    This article analyses the explanations organizational members used to make sense of the meanings and practices of gender equity. Studying gender equity as an organizational value provided a way of understanding how gender inequity is perpetuated and embedded in the culture of an organization. This study was informed by post-structuralist feminist theory as it provided a lens for understanding and critiquing the local meanings and production of gendered knowledge, and encouraged discussion of transforming meanings and practices. This study was situated in a Canadian university athletic department in which gender equity was an espoused organizational value, but gender inequities were evident. Data were collected from in-depth interviews with administrators, coaches and athletes, observations of practices and competitions, and the analysis of relevant documents. These data were coded and categorized using Atlas.ti. Respondents' explanations for the gap between what was espoused and what was enacted centred on two dominant, but contradictory, themes: a denial of gender inequities and a rationalization of gender inequities. These themes suggested respondents often understood inequities as expected, natural, or normal. [source]


    Academic Careers and Gender Equity: Lessons Learned from MIT1

    GENDER, WORK & ORGANISATION, Issue 2 2003
    Lotte Bailyn
    This article describes the experience at the Massachusetts Institute of Technology after the publication of its report A Study on the Status of Women Faculty in Science at MIT. It starts by describing aspects of the academic career that make it difficult for women, or anyone with responsibilities outside of their academic work. It then outlines three definitions of gender equity based on equality, fairness, and integration, and probes the reasons behind persisting inequities. The MIT results fit well into the first two definitions of gender equity, but fall short on the last. Finally, the article analyses the factors that came together at MIT to produce the outcome described and indicates the lessons learned and those still to be learned. [source]


    The Illusion of Equity: An Examination of Community Based Natural Resource Management and Inequality in Africa

    GEOGRAPHY COMPASS (ELECTRONIC), Issue 9 2010
    Cerian Gibbes
    This article examines the dual goals of community based natural resource management (CBNRM) as a way to protect the environment (specifically wildlife) and enhance the socio-economic equity of communities. As described in the literature, CBNRM should integrate ecological sustainability, economic efficiency and social equity (Pagdee et al. 2006). Although occasionally successful at the first two ideal objectives, the enhancement of social equity is often wanting due to a priori assumptions about communities and resource management devolution. This article based largely on published literature, and addresses the constraints and opportunities for successful CBNRM in Africa, largely focusing on southern Africa as that part of the world has been one of the early testing grounds for these environmental management ideas. [source]


    Does Work Always Pay in Germany?

    GERMAN ECONOMIC REVIEW, Issue 3 2010
    Christoph Scheicher
    Equity; redistribution; social insurance; taxes Abstract. Income redistribution in Germany is the result of a combination of several redistribution instruments: there is a complex income tax law, different obligatory social insurances and supplementary benefits. This paper estimates income redistribution by quantile regression, using German EVS data. Two results are obtained: income after redistribution does not always increase in line with income before redistribution, i.e. for people with a low income before redistribution, it does not make sense to increase their efforts, since more work means less earnings. Further, an increasing redistribution rate for higher incomes is not always observable from the data. [source]


    A Random Utility Model of Environmental Equity

    GROWTH AND CHANGE, Issue 1 2000
    Diane Hite
    Past attempts to uncover evidence that economically disadvantaged groups are unjustly exposed to environmental disamenities have failed to take into account self-selection behavior of individuals or groups of individuals. For instance, when choosing a place to live, households may be trading environmental quality for other housing, neighborhood, and location characteristics they care about. Previous literature on environmental justice has investigated location choice of polluting industries, but fails to account for consumer self-selection in housing markets. This paper thus focuses on location choice of individuals based on observed housing transactions. From the results of a random utility model, a test is proposed that incorporates the no-envy concept of economic equity. The results support a finding for environmental discrimination with respect to African American households, but do not support the hypothesis that poor households in general are unfairly exposed to environmental disamenities. [source]


    Health Action Zones: Partnerships for Health Equity

    HEALTH & SOCIAL CARE IN THE COMMUNITY, Issue 4 2006
    Andrea Wild Dr
    No abstract is available for this article. [source]


    Exploring Access and Equity in Higher Education: Policy and Performance in a Comparative Perspective

    HIGHER EDUCATION QUARTERLY, Issue 2 2007
    Patrick Clancy
    A comparative analysis of how access and equity are defined and how policies have evolved reveals a number of commonalities and differences between countries. The overall trend is a movement from the priority given to ,inherited merit' in the admission process through a commitment to formal equality, towards the application of some modes of affirmative action for selected under-represented groups. This overall convergence, which is accompanied by a growing appreciation of the complexity of social identities, is complemented by significant national specificity in respect of the social categories which are used to define social diversity. In the absence of appropriate comparative measures of participation a Higher Education Participation Index is developed to facilitate cross-country comparisons. A review of current attempts to measure equity in access to higher education points to the need to develop a programme of comparative research which focuses on the social characteristics of students who are currently enrolled in higher education. [source]


    Does Decentralisation Improve Equity and Efficiency in Public Service Delivery Provision?

    IDS BULLETIN, Issue 1 2007
    Mark Robinson
    First page of article [source]


    The Australian corporate rescue regime: bold experiment or sensible policy?

    INTERNATIONAL INSOLVENCY REVIEW, Issue 2 2001
    Colin Anderson
    This paper takes its title from a paper given by the Honourable Justice Robert Austin, of the Supreme Court of New South Wales, to a conference on Key developments in Corporate Law and Equity in March 2001. In that speech he described Australia's corporate rescue regime as a "bold experiment". This paper suggests that this is not a justified description and further that it is unlikely to end in the foreseeable future. The paper consists of a broad outline of how the system operates in Australia. It provides some commentary on the more significant features of the operation of Part 5.3A of the Corporations Law and considers suggestions that have been made in respect of reform of the legislation. The paper goes on to consider how the regime has been used since its introduction showing it is now the most widely used form of insolvency administration. The paper then examines briefly some of the attempts at evaluation of the regime. It concludes by suggesting that at this stage there is inadequate information to be conclusive as to the procedure's success or otherwise in fulfilling its aims of providing better returns to creditors. It is argued first, that the wide use of the procedure suggests that it is unlikely to be fundamentally altered in the near future. A further conclusion is that there is some soundness in the approach that the legislation takes in having less court control and a greater role played by the insolvency practitioner. [source]


    Equity and efficiency as components of a social welfare function

    INTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 2 2009
    Satya R. Chakravarty
    C43; D31; D63; O15 An income distribution-based abbreviated social welfare function is an increasing function of equity and efficiency. When inequality is of relative type, we characterize variants of the Atkinson,Kolm,Sen and the Shorrocks abbreviated welfare functions, where the variation results from the existence of a corresponding trade-off parameter, and in each case if the parameter becomes one the two forms coincide. When the value of the parameter increases, equity gains more weight in the equity,efficiency trade-off. For absolute inequality, we characterize the Blackorby,Donaldson,Kolm welfare function. Some implications of the lexicographic-type equity used in the paper are also considered. [source]


    ARCHSECRET: a multi-item scale to measure service quality within the voluntary sector

    INTERNATIONAL JOURNAL OF NONPROFIT & VOLUNTARY SECTOR MARKETING, Issue 2 2001
    Liz Vaughan
    This paper provides an overview of the application of SERVQUAL reflecting the theoretical criticisms concerning disconfirmation model, process orientation, role of expectations and portability. The original SERVQUAL framework was found to be inappropriate for services that had no close analogue with the private sector. A qualitative research study was undertaken to establish the sector-specific criteria used by customers to evaluate service quality. The study identified 40 potentially unique features of the service as perceived by service recipients. These features were developed into a pilot survey instrument that comprised 40 questions, covering expectations, perceptions and importance. A pilot study was undertaken to test the instrument among disabled customers and their carers across the main centres of a national voluntary organisation. Analyses of the pilot survey data resulted in a set of 27 distinct statements across ten hypothesised service quality dimensions. These are Access, Responsiveness, Communication, Humaneness, Security, Enabling/Empowerment, Competence, Reliability, Equity, and Tangibles, giving rise to the acronym ARCHSECRET. The ARCHSECRET instrument is potentially a powerful diagnostic tool for managers in their pursuit of continuous quality improvement within voluntary sector organisations. Copyright 2001 Henry Stewart Publications [source]


    Sophistication in Risk Management, Bank Equity, and Stability,

    INTERNATIONAL REVIEW OF FINANCE, Issue 1 2010
    HANS GERSBACH
    ABSTRACT We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system that uses an average rating with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both banking systems compete for deposits, loans, and bank equity. While a sophisticated system rewards entrepreneurs with low default risks with low loan interest rates, a simple system acquires more bank equity and finances more entrepreneurs. Expected repayments in a simple system are always higher and its default risk may be lower. As an economy with a sophisticated banking system invests its funds more efficiently, there is a trade-off between efficiency and stability of a banking system. [source]


    Managerial Opportunism and Capital Structure Adjustments: Equity,for,debt Swap and Convertible Debt

    INTERNATIONAL REVIEW OF FINANCE, Issue 1 2002
    Nobuyuki IsagawaArticle first published online: 16 MAY 200
    This paper shows how capital structure adjustments through an equity,for,debt swap and convertible debt can resolve the inefficiency caused by managerial opportunism. We consider a situation in which a corporate manager's investment decision is affected by the firm's debt level. Although both an equity,for,debt swap and convertible debt can induce the self,interested manager to undertake only value,increasing projects through capital structure adjustments, there exists a significant difference between these two financial instruments. An equity,for,debt swap, which requires the agreement of both shareholders and debt holders, can change a firm's debt level only prior to the manager's investment decision. On the other hand, convertible debt, which gives debt holders a unilateral right to convert, can change a firm's debt level even after the manager's investment decision. [source]


    Has the Portuguese NHS Achieved its Objectives of Equity and Efficiency?

    INTERNATIONAL SOCIAL SECURITY REVIEW, Issue 4 2000
    Anna Dixon
    The Portuguese healthcare system has been in a state of continuous change since the political revolution of 1974, which brought about a constitutional commitment to a universal and comprehensive national health service. Despite much legislative activity, only partial implementation of these laws has taken place and the current system requires further changes if it is to attain its stated objectives of increasing equity and efficiency. This article analyses and assesses the state of the healthcare system in Portugal based on a review of the literature and interviews with key policymakers and academics and evaluates it against the criteria of equity and efficiency. [source]


    The Role of Private Equity in Life Sciences

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2010
    Jeff Greene
    In a roundtable published in this journal a year ago, there was a clear consensus that the R&D function in big pharma was inefficient and in need of major restructuring, possibly through increased investments by venture capital and private equity firms. In this discussion, an accomplished group of industry practitioners begins by looking at the prospects for both venture capital and private equity to play meaningful roles in financing early- and mid-stage drug development. In so doing, they explore questions like the following: , Are there ways for big pharma and biotech to reduce "science risk" and make R&D funding more profitable and attractive to venture capital and private equity,and perhaps even hedge funds? , What roles do you see for specialty PE firms like Symphony Capital and Paul Capital, which are now bundling mid-stage development assets and securitizing royalties? Then the panelists turn to the broader life sciences industry and consider the outlook for leveraged private equity transactions involving marketed products, late-stage development, and services. Here they consider issues like the following: , Will PE be attracted to less-R&D-intensive activities like medtech and generics? , Have the recent consolidation through mergers and reorganization of big pharma into decentralized business units created opportunities for carve-outs of certain businesses? For big pharma and life sciences companies in general, the answers to such questions point to greater specialization and focus achieved partly through strategic alliances with venture capital, private equity, and even hedge funds, and involving marketed products and services as well as early-stage drug development. [source]


    The Future of Private Equity

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2009
    Steve Kaplan
    A distinguished University of Chicago financial economist and longtime observer of private equity markets responds to questions like the following: ,With a track record that now stretches in some cases almost 30 years, what have private equity firms accomplished? What effects have they had on the performance of the companies they invest in, and have they been good for the economy? ,How will highly leveraged PE portfolio companies fare during the current downturn, especially with over $400 billion of loans coming due in the next three to five years? ,With PE firms now sitting on an estimated $500 billion in capital and leveraged loan markets shut down, are the firms now contemplating new kinds of investment that require less debt? ,If and when the industry makes a comeback, do you expect any major changes that might allow us to avoid another boom-and-bust cycle? Have the PE firms or their investors made any obvious mistakes that contribute to such cycles, and are they now showing any signs of having learned from those mistakes? Despite the current problems, the operating capabilities of the best PE firms, together with their ability to manage high leverage and the increased receptiveness of public company CEOs and boards to PE investments, have all helped establish private equity as "a permanent asset class." Although many of the deals done in 2006 and 2007 were probably overpriced, the "cov-lite" deal structures, deferred repayments of principal, and larger coverage ratios have afforded more room for reworking troubled deals. As a result of that flexibility, and of the kinds of companies that get taken private in leveraged deals in the first place, most troubled PE portfolio companies should end up being restructured efficiently, thereby limiting the damage to the overall economy. Part of the restructuring process involves the use of the PE industry's huge stockpile of capital to purchase distressed debt and inject new equity into troubled deals (in many cases, their own). At the same time the PE firms have been working hard to rescue their own deals, some have been taking significant minority positions in public companies, while gaining some measure of control. Finally, to limit overpriced and overlev-eraged deals in the future, and so avoid the boom-and-bust cycle that appears to have become a predictable part of the industry, the discussion explores the possibility that the limited partners and debt providers that supply most of the capital for PE investments will insist on larger commitments of equity by sponsors to their own funds and individual deals. [source]


    Operational Improvement: The Key to Value Creation in Private Equity

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2009
    Gary Matthews
    With credit tightening having reduced the availability of leverage and intensified the competition for new deals, the economic recession has caused many companies in private equity firm portfolios to under-perform. These changes are forcing the private equity firms to depend even more on their ability to improve operating performance to achieve their investment goals and generate attractive returns. But few PE firms have proved capable of achieving such improvements in portfolio companies consistently over time. In this paper, the authors discuss several ways that private equity firms use their operating expertise to drive value in their portfolio companies. They also examine the analytical framework used by some PE firms when assessing and prioritizing the many operational initiatives that could be undertaken within a newly acquired company. Part of that examination involves a detailed look at how private equity firms assemble an attractive mix of operational improvement projects in their initial 100-day plans. Finally, the authors explore one of the challenges faced by private equity firms when attempting to implement operational enhancements in newly acquired companies: bringing about change without alienating company management. The real-world application of this approach is demonstrated with a case study that shows how one private equity buyer put its operational skills into practice to help create value within a mid-sized portfolio company. [source]


    Private Equity, Corporate Governance, and the Reinvention of the Market for Corporate Control

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2008
    Karen H. Wruck
    In the early 1980s, during the first U.S. wave of debt-financed hostile takeovers and leveraged buyouts, finance professors Michael Jensen and Richard Ruback introduced the concept of the "market for corporate control" and defined it as "the market in which alternative management teams compete for the right to manage corporate resources." Since then, the dramatic expansion of the private equity market, and the resulting competition between corporate (or "strategic") and "financial" buyers for deals, have both reinforced and revealed the limitations of this old definition. This article explains how, over the past 25 years, the private equity market has helped reinvent the market for corporate control, particularly in the U.S. What's more, the author argues that the effects of private equity on the behavior of companies both public and private have been important enough to warrant a new definition of the market for corporate control,one that, as presented in this article, emphasizes corporate governance and the benefits of the competition for deals between private equity firms and public acquirers. Along with their more effective governance systems, top private equity firms have developed a distinctive approach to reorganizing companies for efficiency and value. The author's research on private equity, comprising over 20 years of interviews and case studies as well as large-sample analysis, has led her to identify four principles of reorganization that help explain the success of these buyout firms. Besides providing a source of competitive advantage to private equity firms, the management practices that derive from these four principles are now being adopted by many public companies. And, in the author's words, "private equity's most important and lasting contribution to the global economy may well be its effect on the world's public corporations,those companies that will continue to carry out the lion's share of the world's growth opportunities." [source]


    Private Equity: Past, Present, and Future

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2007
    Steve Kaplan
    [source]