References (28)



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

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, in states with high levels of corruption, and in swing states. Further, the likelihood that the incumbent will be re-elected increases as employment increases. We also provide evidence of specific benefits experienced by target firms from their political connections. Our conclusions are corroborated by a number of tests designed to mitigate specific selection concerns, including placebo tests of unsuccessful takeover attempts.

Number of Pages in PDF File: 49

Keywords: Private Equity, Political Connections, Employment

JEL Classification: G24, G3, J23

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Date posted: July 5, 2013 ; Last revised: June 9, 2015

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)
B-1050 Brussels
HOME PAGE: http://www.ecgi.org
Scott H. C. Hsu (Contact Author)
University of Wisconsin - Milwaukee ( email )
Bolton Hall 802
3210 N. Maryland Ave.
Milwaukee, WI 53211
United States
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References:  28

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