{"id":1358,"date":"2020-12-13T11:34:13","date_gmt":"2020-12-13T10:34:13","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/blog\/blog\/governing-managing-exploring-modes-control-private-equity-relationships\/"},"modified":"2020-12-13T11:34:13","modified_gmt":"2020-12-13T10:34:13","slug":"governing-managing-exploring-modes-control-private-equity-relationships","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/","title":{"rendered":"From Governing to Managing: Exploring Modes of Control in Private Equity Relationships"},"content":{"rendered":"<p><span style=\"font-size:12px;\"><span style=\"font-family:times new roman,times,serif;\">Despite the economic significance of private equity (PE) firms, there has been limited investigation into the control mechanisms they implement to manage relationships with their portfolio companies. Through a comparative field study, we describe the role and characteristics of controls implemented by PE firms and the contextual factors associated with the relative importance of different control mechanisms. Evidence shows that control mechanisms play an important role in directing the actions of portfolio companies and that there is significant variation between PE firms in terms of the combination of contractual provisions, performance measurement and incentives, rules and procedures, and social interaction and trust that are relied upon. We find that the primary factors associated with the choice of control combinations are 1) whether or not the PE firm has a controlling interest in the portfolio company and 2) whether the portfolio company is managed by an entrepreneur or professional manager. We derive a framework of four control combinations that are aligned to variations in these two factors.<\/span><\/span><\/p>\n<p><span style=\"font-size:12px;\"><span style=\"font-family:times new roman,times,serif;\">This paper is co-authored by&nbsp;<\/span><\/span><a href=\"https:\/\/papers.ssrn.com\/sol3\/cf_dev\/AbsByAuth.cfm?per_id=583733\" style=\"font-family: &quot;times new roman&quot;, times, serif; background-color: transparent; box-sizing: border-box; color: rgb(0, 118, 212); text-decoration-line: none;\" target=\"_blank\" title=\"View other papers by this author\" rel=\"noopener\">David S. Bedford<\/a>&nbsp;(<span style=\"font-family: &quot;times new roman&quot;, times, serif; color: rgb(80, 80, 80);\">University of Technology Sydney), and&nbsp;<\/span><a href=\"https:\/\/papers.ssrn.com\/sol3\/cf_dev\/AbsByAuth.cfm?per_id=340739\" style=\"font-family: &quot;times new roman&quot;, times, serif; background-color: transparent; box-sizing: border-box; color: rgb(0, 118, 212); text-decoration-line: none;\" target=\"_blank\" title=\"View other papers by this author\" rel=\"noopener\">Angelo Ditillo<\/a>&nbsp;(<span style=\"font-family: &quot;times new roman&quot;, times, serif; color: rgb(80, 80, 80);\">Bocconi University &#8211; Department of Accounting; SDA Bocconi), and forthcoming at the European Accounting Review.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Despite the economic significance of private equity (PE) firms, there has been limited investigation into the control mechanisms they implement to manage relationships with their portfolio companies. Through a comparative field study, we describe the role and characteristics of controls implemented by PE firms and the contextual factors associated with the relative importance of different [&hellip;]<\/p>\n","protected":false},"author":61,"featured_media":1359,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>From Governing to Managing: Exploring Modes of Control in Private Equity Relationships - ARC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"From Governing to Managing: Exploring Modes of Control in Private Equity Relationships - ARC\" \/>\n<meta property=\"og:description\" content=\"Despite the economic significance of private equity (PE) firms, there has been limited investigation into the control mechanisms they implement to manage relationships with their portfolio companies. Through a comparative field study, we describe the role and characteristics of controls implemented by PE firms and the contextual factors associated with the relative importance of different [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/\" \/>\n<meta property=\"og:site_name\" content=\"ARC\" \/>\n<meta property=\"article:published_time\" content=\"2020-12-13T10:34:13+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/eaa-online.org\/app\/uploads\/sites\/3\/2020\/12\/ear_logo_6.png\" \/>\n\t<meta property=\"og:image:width\" content=\"640\" \/>\n\t<meta property=\"og:image:height\" content=\"366\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"ARC Commitee\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ARC Commitee\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/\",\"name\":\"From Governing to Managing: Exploring Modes of Control in Private Equity Relationships - ARC\",\"isPartOf\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\"},\"datePublished\":\"2020-12-13T10:34:13+00:00\",\"dateModified\":\"2020-12-13T10:34:13+00:00\",\"author\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\",\"url\":\"https:\/\/eaa-online.org\/arc\/\",\"name\":\"ARC\",\"description\":\"Advanced Resources Center\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/eaa-online.org\/arc\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\",\"name\":\"ARC Commitee\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/members\/61\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"From Governing to Managing: Exploring Modes of Control in Private Equity Relationships - ARC","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/eaa-online.org\/arc\/blog\/2020\/12\/13\/governing-managing-exploring-modes-control-private-equity-relationships\/","og_locale":"en_US","og_type":"article","og_title":"From Governing to Managing: Exploring Modes of Control in Private Equity Relationships - ARC","og_description":"Despite the economic significance of private equity (PE) firms, there has been limited investigation into the control mechanisms they implement to manage relationships with their portfolio companies. 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