Provision of financial information and its impact on the relationship between executives and venture capital managers: a study of the private equity market in Egypt.

Abeer Hassan, Essam Ibrahim

Research output: Contribution to journalArticle

Abstract

This study makes an attempt to further understand the practices of private equity/venture capital (PE/VC) in developing markets. We focus our attention on the relationship between PE/VC firms and the investee companies (ICs) and its development. We investigate the provision of financial and non-financial information and its effects on the development of the relationship between chief executive officers (CEOs) and PE/VC managers in Egypt as one of the developing markets. Data were collected from Egyptian PE/VC firms via semi-structured interviews. Both similarities and differences were found between Egyptian PE/VC in respect of developing the relationships with their ICs. Results show that the provision of timely information allows PE/VC managers to: (i) have a higher degree of trust on CEOs; (ii) be more supportive of the CEO's strategic decisions; and (iii) interact more frequently with the ICs. The origin of the PE/VC firms seems to have an effect on the Egyptian PE/VC firms’ behaviours. International PE/VC firms are also more likely to get involved in every decision at the strategic level of the ICs. The current study provides some implications for both CEOs of the ICs and PE/VC managers. It is important for PE/VC managers to develop and maintain successful relationships with ICs, which will promote a positive image of the PE/VC firms that can be used for marketing purposes, which in turn can be translated into more deals in the future.
Original languageEnglish
Pages (from-to)80-95
Number of pages15
JournalJournal of Financial Services Marketing
Volume17
Issue number1
Publication statusPublished - 2012

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Egypt
Managers
Venture capital
Financial information
Equity markets
Private equity
Venture capital firms
Chief executive officer
Firm behavior
Strategic decisions
Structured interview
Non-financial information
Marketing

Cite this

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title = "Provision of financial information and its impact on the relationship between executives and venture capital managers: a study of the private equity market in Egypt.",
abstract = "This study makes an attempt to further understand the practices of private equity/venture capital (PE/VC) in developing markets. We focus our attention on the relationship between PE/VC firms and the investee companies (ICs) and its development. We investigate the provision of financial and non-financial information and its effects on the development of the relationship between chief executive officers (CEOs) and PE/VC managers in Egypt as one of the developing markets. Data were collected from Egyptian PE/VC firms via semi-structured interviews. Both similarities and differences were found between Egyptian PE/VC in respect of developing the relationships with their ICs. Results show that the provision of timely information allows PE/VC managers to: (i) have a higher degree of trust on CEOs; (ii) be more supportive of the CEO's strategic decisions; and (iii) interact more frequently with the ICs. The origin of the PE/VC firms seems to have an effect on the Egyptian PE/VC firms’ behaviours. International PE/VC firms are also more likely to get involved in every decision at the strategic level of the ICs. The current study provides some implications for both CEOs of the ICs and PE/VC managers. It is important for PE/VC managers to develop and maintain successful relationships with ICs, which will promote a positive image of the PE/VC firms that can be used for marketing purposes, which in turn can be translated into more deals in the future.",
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AB - This study makes an attempt to further understand the practices of private equity/venture capital (PE/VC) in developing markets. We focus our attention on the relationship between PE/VC firms and the investee companies (ICs) and its development. We investigate the provision of financial and non-financial information and its effects on the development of the relationship between chief executive officers (CEOs) and PE/VC managers in Egypt as one of the developing markets. Data were collected from Egyptian PE/VC firms via semi-structured interviews. Both similarities and differences were found between Egyptian PE/VC in respect of developing the relationships with their ICs. Results show that the provision of timely information allows PE/VC managers to: (i) have a higher degree of trust on CEOs; (ii) be more supportive of the CEO's strategic decisions; and (iii) interact more frequently with the ICs. The origin of the PE/VC firms seems to have an effect on the Egyptian PE/VC firms’ behaviours. International PE/VC firms are also more likely to get involved in every decision at the strategic level of the ICs. The current study provides some implications for both CEOs of the ICs and PE/VC managers. It is important for PE/VC managers to develop and maintain successful relationships with ICs, which will promote a positive image of the PE/VC firms that can be used for marketing purposes, which in turn can be translated into more deals in the future.

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