Politically Connected Private Equity and Employment
Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Scott H. C. Hsu
University of Arkansas - Department of Finance
September 12, 2013
Journal of Finance, Forthcoming
We investigate the employment consequences of private equity buyouts. We find that, on average, buyouts by politically connected private equity firms are associated with higher job creation at the establishments operated by their target firms than buyouts by non-connected private equity firms. Consistent with an exchange of favors story, establishments operated by targets of politically connected private equity firms increase employment more during election years and in states with high levels of corruption. We also provide evidence of specific benefits experienced by target firms from their political connections. Our conclusions are corroborated by tests designed to mitigate selection concerns.
Number of Pages in PDF File: 52
Keywords: Private Equity, Political Connections, Employment
JEL Classification: G24, G3, J23
Date posted: July 5, 2013 ; Last revised: August 3, 2016
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollobot1 in 2.297 seconds