Private Equity and Financial Fragility During the Crisis

60 Pages Posted: 4 Aug 2017 Last revised: 23 Jul 2023

See all articles by Shai Bernstein

Shai Bernstein

Harvard University - Business School (HBS)

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Private Capital Research Institute

Filippo Mezzanotti

Kellogg School of Management - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

Do private equity firms contribute to financial fragility during economic crises? We find that during the 2008 financial crisis, PE-backed companies increased investments relative to their peers, while also experiencing greater equity and debt inflows. The effects are stronger among financially constrained companies and those whose private equity investors had more resources at the onset of the crisis. PE-backed companies consequentially experienced higher asset growth and increased market share during the crisis.

Suggested Citation

Bernstein, Shai and Lerner, Josh and Mezzanotti, Filippo, Private Equity and Financial Fragility During the Crisis (July 2017). NBER Working Paper No. w23626, Available at SSRN: https://ssrn.com/abstract=3011104

Shai Bernstein (Contact Author)

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Josh Lerner

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)

HOME PAGE: http://www.people.hbs.edu/jlerner/

Harvard University - Entrepreneurial Management Unit

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United States

National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI) ( email )

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Harvard University - Private Capital Research Institute ( email )

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Filippo Mezzanotti

Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States

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