Does private equity ownership improve corporate performance?

Nyheder

Nyt arbejdspapir af Frederik Vinten

 
11/04/2008

Abstract

This paper studies the impact of private equity (PE) buyout fund ownership on the performance of their portfolio firms. Using Danish data during 1991-2004 portfolio firms are compared to otherwise comparable firms not subjected to such an ownership change. The main finding is that PE buyout fund ownership has a significant negative effect on firm performance relatively to similar firms. This result indicates that the socalled superior corporate governance model is not consistent with the data partly because post-buyout ownership concentration falls and that debt does not lead to efficiency improvements. Moreover, a proxy for expropriation seems to be present in the data since post-buyout dividend payments increases. Alternative explanations are examined - such as selection bias, valuation bias and measurement errors – but the main finding remains unaffected.

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Sidst opdateret: Communications // 26/10/2012