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  • April 2017
  • Article
  • Management Science

Private Equity and Industry Performance

By: Shai Bernstein, Josh Lerner, Morten Sorensen and Per Stromberg
  • Format:Print
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Abstract

The growth of the private equity industry has spurred concerns about its potential impact on the economy more generally. This analysis looks across nations and industries to assess the impact of private equity on industry performance. Industries where PE funds have invested in the past five years have grown more quickly in terms of productivity and employment. There are few significant differences between industries with limited and high private equity activity. It is hard to find support for claims that economic activity in industries with private equity backing is more exposed to aggregate shocks. The results using lagged private equity investments suggest that the results are not driven by reverse causality. These patterns are not driven solely by common law nations such as the United Kingdom and United States, but also hold in Continental Europe.

Keywords

Private Equity; Markets; Entrepreneurship; Performance; Economy

Citation

Bernstein, Shai, Josh Lerner, Morten Sorensen, and Per Stromberg. "Private Equity and Industry Performance." Management Science 63, no. 4 (April 2017): 1198–1213.
  • Find it at Harvard

About The Authors

Shai Benjamin Bernstein

Entrepreneurial Management
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Josh Lerner

Entrepreneurial Management
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More from the Authors
  • Life After Death: A Field Experiment with Small Businesses on Information Frictions, Stigma, and Bankruptcy By: Shai Benjamin Bernstein, Emanuele Colonnelli, Mitchell Hoffman and Benjamin Iverson
  • Why Decentralized Crypto Platforms Are Weathering the Crash By: Shai Bernstein and Scott Duke Kominers
  • Financial Acquisitions By: Josh Lerner, Amit Seru and Jennifer Zou
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