Private Equity in the Global Economy: Evidence on Industry Spillovers

59 Pages Posted: 17 Oct 2018 Last revised: 22 Oct 2018

See all articles by Serdar Aldatmaz

Serdar Aldatmaz

George Mason University - Department of Finance

Gregory W. Brown

University of North Carolina (UNC) at Chapel Hill - Finance Area

Date Written: January 11, 2018

Abstract

Using a novel dataset on global private equity investments in 19 industries across 48 countries, we find that following investments by private equity funds labor productivity, employment, pro fitability, and capital expenditures increase for publicly-listed companies in the same country and industry. This suggests that positive externalities created by private equity firms are absorbed by other companies within the same industry. These effects are more pronounced in country-industries with higher levels of competition suggesting that the competitive pressure from private equity-backed fi rms forces industry peers to react. On the fi nancial side, we provide evidence that buyout investments lead to higher debt levels within the industry. Overall, our findings suggest that private equity investments have important spillovers to the real economy.

Keywords: private equity, venture capital, productivity spillovers, industry growth

JEL Classification: G23, G24, G30, O40

Suggested Citation

Aldatmaz, Serdar and Brown, Gregory W., Private Equity in the Global Economy: Evidence on Industry Spillovers (January 11, 2018). UNC Kenan-Flagler Research Paper No. 2013-9; 29th Annual Conference on Financial Economics & Accounting 2018. Available at SSRN: https://ssrn.com/abstract=2189707 or http://dx.doi.org/10.2139/ssrn.2189707

Serdar Aldatmaz (Contact Author)

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States

Gregory W. Brown

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
478
rank
56,376
Abstract Views
2,083
PlumX Metrics