Determinants of International Buyout Investments

53 Pages Posted: 24 Mar 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 23, 2020

Abstract

Using a comprehensive and proprietary data set on international private equity activity, this paper studies the determinants of buyout investments across 61 countries and 19 industries over 1990-2017. The study finds 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. The paper shows that countries with low unemployment, more active stock and credit markets, and better rule of law receive more buyout capital. A difference-in-differences approach is used to explore the regulatory reforms some countries have adopted over the sample period. The findings are 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.

Suggested Citation

Aldatmaz, Serdar and Brown, Gregory W. and Demirgüç-Kunt, Asli, Determinants of International Buyout Investments (March 23, 2020). World Bank Policy Research Working Paper No. 9191, Available at SSRN: https://ssrn.com/abstract=3559885

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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