Private Equity in the Global Economy: Evidence on Industry Spillovers
57 Pages Posted: 17 Oct 2018 Last revised: 22 Aug 2019
Date Written: July 29, 2019
Using a novel dataset on global private equity investments in 19 industries across 52 countries, we find that labor productivity, employment, profitability, and capital expenditures increase for publicly-listed companies in the same country and industry as private equity investments. Our results show that positive externalities created by private equity firms are absorbed by other companies within the same industry. Consistent with prior literature on competitive spillovers, these effects are more pronounced in country-industries with higher levels of competition, stronger institutions, and moderate levels of technological development suggesting that the competitive pressures from private equity-backed firms cause industry peers to react.
Keywords: private equity, venture capital, productivity spillovers, industry growth
JEL Classification: G23, G24, G30, O40
Suggested Citation: Suggested Citation