n South African Journal of Business Management - Corporate governance criteria as applied in private equity investments

Volume 36, Issue 1
  • ISSN : 2078-5585


Ineffective governance has often formed a backdrop to corporate failure with the resultant negative impact onstakeholders. In the field of private equity, investors have consistently received financial returns that outperform those oflisted equities. This research investigates the relationship that private equity principals seek with their agents.<br>The "agent-principal" relationship in private equity investments was investigated through a literature review and a surveyof experienced private equity practitioners identified the key characteristics associated with this relationship. A conjointanalytical technique was used to measure the relative importance of the various attributes and the degree of preference orutility value for these attributes amongst a sample of 27 experts.<br>The field research established that private equity investments are characterised by, inter alia, proactive agent-principalrelationships; a relatively high level of shareholder activism; insistence on transparency; non-executive influence; andactive performance management. While the implementation of these lessons may be a subject for future research, thecurrent research has identified and prioritised corporate governance mechanisms that may be more generally applied.

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