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Private Equity and Financial Fragility During the Crisis

Author

Listed:
  • Bernstein, Shai

    (Stanford University)

  • Lerner, Josh

    (Harvard University)

  • Mezzanotti, Filippo

    (Northwestern University)

Abstract

Do private equity firms contribute to financial fragility during economic crises? We find that during the 2008 financial crisis, PE-backed companies increased investments relative to their peers, while also experiencing greater equity and debt inflows. The effects are stronger among financially constrained companies and those whose private equity investors had more resources at the onset of the crisis. PE-backed companies consequentially experienced higher asset growth and increased market share during the crisis.

Suggested Citation

  • Bernstein, Shai & Lerner, Josh & Mezzanotti, Filippo, 2017. "Private Equity and Financial Fragility During the Crisis," Research Papers 3563, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3563
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    File URL: https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/436776
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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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