Earnings quality of private equity-backed and non-private equity-backed firms in India

Abstract

Private equity (PE) investors provide a lot of funding, are actively involved in a company, and help earn high returns by taking a large amount of risk. India has been open to PE investment since 1998. During the financial crisis era, many companies shifted their focus toward PE financing, and many investments were made in India during 2007-2008. This article studies the earnings quality of PE-backed firms and non-PE-backed firms. The measures of earnings have been taken as the persistence effect of accruals and cash flows. The dataset has been arranged in a panel data form for a time period of 10 years, and the Heckman correction procedure was used to control endogeneity and sample selection bias.