IDEAS home Printed from
   My bibliography  Save this paper

On the Real Effects of Private Equity


  • Roosenboom, P.G.J.


Private equity has become an increasingly important part of our economy. Around the world the companies owned by private equity investors account for a substantial percentage of Gross Domestic Product (GDP) and private sector employment. These investors have recently been under fire in the media when they takeover companies. Private equity investors are at best seen as ‘kings of capitalism’ and at worst as ‘barbarians’ and ‘weapons of mass destruction’. The first part of this address contrasts this negative press with what we know about the real effects of private equity from academic studies. In general, private equity seems to be more negatively written about in the media then is warranted based on recent empirical evidence. However, as this address will show the jury is still out on a large number of issues that deserve further attention. One of the issues we know surprisingly little about is the real effects of private equity. Although policymakers are extremely wary of buy-outs, they tend to welcome venture capital investments. They believe that venture capital helps to close the funding gap faced by small high-growth companies that banks are reluctant to finance. The second part of this address discusses recent research that investigates the impact of private equity on the creation of new businesses in Europe. We find that private equity positively impacts the number of start-up firms at the country and industry level. Especially the availability of venture capital to finance these new ventures has a positive impact on new business creation, as many European policymakers assume.

Suggested Citation

  • Roosenboom, P.G.J., 2009. "On the Real Effects of Private Equity," ERIM Inaugural Address Series Research in Management EIA-2009-040-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
  • Handle: RePEc:ems:euriar:16710

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Asker, John & Farre-Mensa, Joan & Ljungqvist, Alexander P., 2010. "Does the Stock Market Harm Investment Incentives?," CEPR Discussion Papers 7857, C.E.P.R. Discussion Papers.
    2. Popov, Alexander, 2009. "Does Finance Bolster Superstar Companies? Banks, Venture Capital, and Firm Size in Local U.S. Markets," Working Paper Series 1121, European Central Bank.
    3. Faccio, Mara & Marchica, Maria-Teresa & Mura, Roberto, 2016. "CEO gender, corporate risk-taking, and the efficiency of capital allocation," Journal of Corporate Finance, Elsevier, vol. 39(C), pages 193-209.

    More about this item


    buyouts; entrepreneurial finance; private equity; venture capital;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ems:euriar:16710. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RePub (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.