Managerial Incentives and Value Creation: Evidence from Private Equity
47 Pages Posted: 13 Feb 2009
There are 3 versions of this paper
Managerial Incentives and Value Creation: Evidence from Private Equity
Managerial Incentives and Value Creation: Evidence from Private Equity
Managerial Incentives and Value Creation: Evidence from Private Equity
Date Written: January 27, 2009
Abstract
We analyze the differences between companies owned by private equity (PE) investors and similar public companies. We document that PE-owned companies use much stronger incentives for their top executives and have substantially higher debt levels. However, we find little evidence that PE-owned firms outperform public firms in profitability or operational efficiency. We also show that the compensation and debt differences between PE-owned companies and public companies disappear over a very short period (one to two years) after the PE-owned firm goes public. Our results raise questions about whether and how PE firms and the incentives they put in place create value.
Keywords: private equity, incentives
JEL Classification: M52, J44, G32
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Leveraged Buyouts and Private Equity
By Steven N. Kaplan and Per Strömberg
-
Leveraged Buyouts and Private Equity
By Steven N. Kaplan and Per Strömberg
-
Do Buyouts (Still) Create Value‘
By Shourun Guo, Edith S. Hotchkiss, ...
-
Do Buyouts (Still) Create Value?
By Shourun Guo, Edith S. Hotchkiss, ...
-
Do Buyouts (Still) Create Value?
By Shourun Guo, Edith S. Hotchkiss, ...
-
Private Equity and Long-Run Investment: The Case of Innovation
By Morten Sorensen, Per Strömberg, ...
-
Private Equity and Long-Run Investment: The Case of Innovation
By Josh Lerner, Morten Sorensen, ...
-
Private Equity and Long-Run Investment: The Case of Innovation
By Morten Sorensen, Per Strömberg, ...
-
Private Equity, Leveraged Buyouts and Governance
By Douglas J. Cumming, Mike Wright, ...