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The Integration of Self-regulation Within the Swedish Private Equity Industry : An Internal Perspective

By Louise Eklund and Maria Jannok

Abstract

The Swedish private equity industry has been the target of vast criticism and media coverage in the years following the most recent financial crisis. As a number of scandals related to private equity owned companies within the welfare sector unfolded, the public confidence assigned to the industry diminished. These events triggered an intricate discussion concerning the regulatory conditions surrounding the industry. In an attempt to regain the confidence of the public and to restore the tarnished reputation of the industry, the alternative regulatory approach self-regulation was utilized and a code of conduct was established on the initiative of the industry in 2015. Current research in the field of private equity is predominantly quantitative and the concept of self-regulation and its components are unexplored. The scarcity of qualitative research addressing private equity and the self-regulatory matter induced the following research question: How is self-regulation integrated within the Swedish private equity industry? The main purpose of this inductive study was to generate an increased understanding and to provide new knowledge concerning the integration of self-regulation within the Swedish private equity industry. In order to accommodate this purpose and to produce an answer to the stated research question, a qualitative and interpretative study was conducted. Semi-structured interviews with eight prominent Swedish private equity professionals were pursued as the study adopted the perspective of the industry. Self-regulation has been integrated at two levels within the Swedish private equity industry in response to the existence of information asymmetry. Firstly, the recently introduced and formalized industry self-regulation addresses the relationship with the public at large. Secondly, the informal self-regulation pursued by the individual private firms targets the relationship with investors. The emphasis of the various self- regulations performed relates to issues of ethical and moral nature. By means of self- regulation, the Swedish private equity industry intends to reduce the prevailing information asymmetry and to safeguard the interests of concerned parties. Consequently, the private equity firms within the industry manage to serve as perfect stewards for the investors as well as the public. In addition, a high industrial morality was observed and ethical concerns are of greatest significance to the industry. Finally, self-regulation has enabled the Swedish private equity industry to become less private.

Topics: Private Equity, Self-regulation, Sweden, Industry Self-regulation, Code of Conduct, Transparency, Reputation, Industrial Morality, Business Administration, Företagsekonomi
Publisher: Umeå universitet, Företagsekonomi
Year: 2016
OAI identifier: oai:DiVA.org:umu-124404
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