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A long-term perspective on private equity ownership

Author

Listed:
  • Nordström, Louise

    (The Ratio institute and Jönköping School of Economics.)

Abstract
Private equity companies are targets to a never-ending controversy debate about their contribution to the economy. The existing empirical data provide, on the one hand, strong evidence that private equity activity contribute positively to efficiency of companies, but they are often viewed as short-term investors who utilize firms’ resources. In this paper I find no empirical support for that claim. By a unique dataset that covers all majority buyouts in Sweden by Swedish private equity firms from 1997-2010 I end up following 680 portfolio firms before and after the buyout as well as after the exit and a peer group defined by industry, size, age and financial performance. I do, however, find that the firms actually performs better after they exit from the private equity firm, which might be a result of sustainable long-term investments rather than short-termism.

Suggested Citation

  • Nordström, Louise, 2016. "A long-term perspective on private equity ownership," Ratio Working Papers 269, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0269
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    File URL: http://ratio.se/publikationer/working-paper-no-269-a-long-term-perspective-on-private-equity-ownership/
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    More about this item

    Keywords

    Private equity; exit; financial performance;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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