Determinants of International Buyout Investments

52 Pages Posted: 31 Aug 2020

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

Asli Demirgüç-Kunt

World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: March 16, 2020

Abstract

Using a comprehensive and proprietary dataset on international private equity activity, we study the determinants of buyout investments across 61 countries and 19 industries over the period of 1990-2017. We find evidence that macroeconomic conditions, development of stock and credit markets, and the regulatory environment in a country are important drivers of international buyout capital flows. We show that countries with low unemployment, more active stock and credit markets, and better rule of law receive more buyout capital. Using a difference-in-difference approach, we explore regulatory reforms some countries have adopted over the sample period and find that countries receive significantly more buyout capital following investor protection and contract enforcement reforms. The impact of regulatory reform is more pronounced in countries with better corporate governance standards and education. Buyout investment responds to these factors more so than foreign direct investment and gross domestic fixed investment.

Keywords: Private Equity, Buyout Investments, Financial Development, Regulatory Reforms

JEL Classification: G24, G38, G15

Suggested Citation

Aldatmaz, Serdar and Brown, Gregory W. and Demirgüç-Kunt, Asli, Determinants of International Buyout Investments (March 16, 2020). Available at SSRN: https://ssrn.com/abstract=3555185 or http://dx.doi.org/10.2139/ssrn.3555185

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

Asli Demirgüç-Kunt

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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