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http://ssrn.com/abstract=1436894
 
 

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On the Real Effects of Private Equity Investment: Evidence from New Business Creation


Alexander A. Popov


European Central Bank (ECB)

Peter Roosenboom


Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

August 6, 2009

ECB Working Paper No. 1078

Abstract:     
Using a comprehensive database of European firms, we study how private equity affects the rate of firm entry. We find that private equity investment benefits new business incorporation, especially in industries with naturally higher entry rates and R&D intensity. A two standard deviation increase in private equity investment explains as much as 5.5% of the variation in entry between high-entry and low-entry industries. We address endogeneity by exploiting data on laws that regulate private equity investments by pension funds. Our results hold when we correct for barriers to entry, general access to credit, protection of intellectual property, and labor regulations.

Number of Pages in PDF File: 52

Keywords: private equity, venture capital, firm entry

JEL Classification: G24, L26, M13

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Date posted: August 9, 2009  

Suggested Citation

Popov, Alexander A. and Roosenboom, Peter, On the Real Effects of Private Equity Investment: Evidence from New Business Creation (August 6, 2009). ECB Working Paper No. 1078. Available at SSRN: http://ssrn.com/abstract=1436894

Contact Information

Alexander A. Popov (Contact Author)
European Central Bank (ECB) ( email )
Kaiserstrasse 29
Frankfurt am Main, D-60311
Germany
Peter Roosenboom
Rotterdam School of Management, Erasmus University ( email )
P.O. Box 1738
Room T09-56
3000 DR Rotterdam
Netherlands
+31 10 40 82255 (Phone)
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
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