Private Equity and the Public Good

Posted: 5 Sep 2012

See all articles by Kevin Morrell

Kevin Morrell

University of Warwick - Warwick Business School

Ian Clark

University of Birmingham

Date Written: September 5, 2009

Abstract

The dominance of agency theory can reduce our collective scope to analyze private equity in all its diversity and depth. We contribute to theorisation of private equity by developing a contrasting perspective that draws on a rich tradition of virtue ethics. In doing so, we juxtapose ‘private equity’ with ‘public good’ to develop points of rhetorical and analytical contrast. We develop a typology differentiating various forms of private equity, and focus on the ‘take private’ form. These takeovers are where private equity funds are used to buy all a firm’s publicly listed shares. Take private deals reduce reporting requirements and lessen the amount of public scrutiny a firm comes under. They allow greater control of a firm’s assets and resources but also have effects in terms of the wider social fabric. The ‘public good’ and virtue ethics offer an alternative basis for theorisation of these deals. This provides a needed contrast to accounts of private equity based on agency theory.

Keywords: private equity, public good, virtue, aristotle, agency theory, critique

Suggested Citation

Morrell, Kevin and Clark, Ian, Private Equity and the Public Good (September 5, 2009). Journal of Business Ethics, Vol. 96, No. 2, pp. 249-263, 2010, Available at SSRN: https://ssrn.com/abstract=2141685

Kevin Morrell (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Ian Clark

University of Birmingham ( email )

Birmingham Business School
Edgbaston, Birmingham B15 2TT
United Kingdom

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