Does the Tenure of Private Equity Investment Improve the Performance of European Firms?
AbstractThe paper investigates whether the presence and tenure of Private Equity (PE) investment in European companies improves their performance. Previous studies documented the unambiguous merit of a buyout during the 1980s and 1990s for listed firms in the US and UK markets. This study analyzes such influences in both listed and unlisted European firms during 2002-2007. Our analysis suggests that shortterm PE investments have, on average, a detrimental effect on firm performance. The performance of a firm that has PE backing is lower than that of a firm without PE backing in the first year of PE investment. Such an effect disappears if PE investments remain in the firm for an uninterrupted six-year term
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 990.
Length: 22 p.
Date of creation: 2010
Date of revision:
Private equity financing; corporate finance;
Other versions of this item:
- Oleg Badunenko & Christopher F. Baum & Dorothea Schäfer, 2010. "Does the tenure of Private Equity investment improve the performance of European firms?," Boston College Working Papers in Economics, Boston College Department of Economics 730, Boston College Department of Economics.
- Oleg Badunenko & Christopher F. Baum & Dorothea Schäfer, 2010. "Does the Tenure of Private Equity Investment Improve the Performance of European Firms?," Working Paper / FINESS, DIW Berlin, German Institute for Economic Research 3.3, DIW Berlin, German Institute for Economic Research.
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-11 (All new papers)
- NEP-BEC-2010-04-11 (Business Economics)
- NEP-EUR-2010-04-11 (Microeconomic European Issues)
- NEP-FMK-2010-04-11 (Financial Markets)
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