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Legal Protection, Corruption and Private Equity Returns in Asia

Cumming, Douglas; Fleming, Grant; Johan, Sofia; Takeuchi, Mai

Description

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...[Show more]

dc.contributor.authorCumming, Douglas
dc.contributor.authorFleming, Grant
dc.contributor.authorJohan, Sofia
dc.contributor.authorTakeuchi, Mai
dc.date.accessioned2015-12-10T23:30:50Z
dc.identifier.issn0167-4544
dc.identifier.urihttp://hdl.handle.net/1885/68351
dc.description.abstractThis 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.
dc.publisherKluwer Academic Publishers
dc.sourceJournal of Business Ethics
dc.subjectKeywords: buyouts; corruption; law and finance; returns
dc.titleLegal Protection, Corruption and Private Equity Returns in Asia
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume95
dc.date.issued2010
local.identifier.absfor140210 - International Economics and International Finance
local.identifier.ariespublicationf2965xPUB1689
local.type.statusPublished Version
local.contributor.affiliationCumming, Douglas, York University
local.contributor.affiliationFleming, Grant, College of Business and Economics, ANU
local.contributor.affiliationJohan, Sofia, Tilburg Law and Economics Center
local.contributor.affiliationTakeuchi, Mai, Wilshire Private Markets
local.description.embargo2037-12-31
local.bibliographicCitation.issueSUPPL. 2
local.bibliographicCitation.startpage173
local.bibliographicCitation.lastpage193
local.identifier.doi10.1007/s10551-011-0853-6
dc.date.updated2016-02-24T08:16:11Z
local.identifier.scopusID2-s2.0-79958038780
CollectionsANU Research Publications

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