Abstract

http://ssrn.com/abstract=2289309
 
 

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Politically Connected Private Equity and Employment


Mara Faccio


Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Scott H. C. Hsu


University of Wisconsin - Milwaukee

September 12, 2013


Abstract:     
This paper investigates the employment consequences of buyouts by politically connected private equity firms. We find that politically connected private equity firms boost employment at their target firms following a buyout. The increase in employment is both statistically and economically significant. We provide evidence that the results are unlikely to be due to politically connected private equity firms selecting different types of targets than non-connected firms. The results are instead consistent with an “exchange of favors” story. For example, politically connected private equity firms boost employment especially during election years and more so in states with high corruption.

Number of Pages in PDF File: 37

Keywords: Private Equity, Political Connections, Employment

JEL Classification: G24, G3, J23

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Date posted: July 5, 2013 ; Last revised: September 13, 2013

Suggested Citation

Faccio, Mara and Hsu, Scott H. C., Politically Connected Private Equity and Employment (September 12, 2013). Available at SSRN: http://ssrn.com/abstract=2289309 or http://dx.doi.org/10.2139/ssrn.2289309

Contact Information

Mara Faccio
Purdue University - Krannert School of Management ( email )
1310 Krannert Building
West Lafayette, IN 47907-1310
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Scott H. C. Hsu (Contact Author)
University of Wisconsin - Milwaukee ( email )
Milwaukee, WI 53211
United States
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