Abstract

https://ssrn.com/abstract=2289309
 
 

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Politically Connected Private Equity and Employment


Mara Faccio


University of Chicago - Booth School of Business; Purdue University - Krannert School of Management; European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Scott H. C. Hsu


University of Arkansas - Department of Finance

September 12, 2013

Journal of Finance, Forthcoming

Abstract:     
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


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Date posted: July 5, 2013 ; Last revised: August 3, 2016

Suggested Citation

Faccio, Mara and Hsu, Scott H. C., Politically Connected Private Equity and Employment (September 12, 2013). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2289309 or http://dx.doi.org/10.2139/ssrn.2289309

Contact Information

Mara Faccio
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Purdue University - Krannert School of Management ( email )
1310 Krannert Building
West Lafayette, IN 47907-1310
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )
BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore
Scott H. C. Hsu (Contact Author)
University of Arkansas - Department of Finance ( email )
Fayetteville, AR 72701
United States
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