Private Equity, Jobs, and Productivity: A Comment

25 Pages Posted: 11 Oct 2017 Last revised: 6 Sep 2018

See all articles by Brian Ayash

Brian Ayash

California State Polytechnic University, San Luis Obispo - Finance Area

Mahdi Rastad

Orfalea College of Business, California State Polytechnic University

Date Written: October 10, 2017

Abstract

Davis et al. (2014) provide evidence that the impact of leveraged buyouts on employment is quite modest. We challenge this view. We illustrate that the documented job creation is the artifact of deviating from Census data event time and selecting October. Moreover, job destruction is potentially underestimated due to four deviations from established practices: (1) failing to specifically identify leveraged buyouts; (2) including secondary buyouts; (3) testing treated establishments while no longer treated; and (4) failing to consider bankruptcies. Finally, Census data under represents controversial larger public-to-private leveraged buyouts. Nonetheless, we applaud efforts to bring data to these sensitive issues.

Keywords: leveraged buyouts, employment, private equity, growth equity

JEL Classification: G23, G32, G33, G34, J21, J63

Suggested Citation

Ayash, Brian and Rastad, Mahdi, Private Equity, Jobs, and Productivity: A Comment (October 10, 2017). Available at SSRN: https://ssrn.com/abstract=3050984 or http://dx.doi.org/10.2139/ssrn.3050984

Brian Ayash (Contact Author)

California State Polytechnic University, San Luis Obispo - Finance Area ( email )

College of Business
San Luis Obispo, CA 93407
United States

Mahdi Rastad

Orfalea College of Business, California State Polytechnic University ( email )

San Luis Obispo, CA 93407
United States

HOME PAGE: http://www.cob.calpoly.edu/faculty/mahdi-rastad/

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