52 Pages Posted: 5 Jul 2013 Last revised: 3 Aug 2016
Date Written: 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 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.
Keywords: Private Equity, Political Connections, Employment
JEL Classification: G24, G3, J23
Suggested Citation: 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