Does the Tenure of Private Equity Investment Improve the Performance of European Firms?

Oleg Badunenko, Christopher Baum and Dorothea Schäfer

No 990, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The paper investigates whether the presence and tenure of Private Equity (PE) investment in European companies improves their performance. Previous studies documented the unambiguous merit of a buyout during the 1980s and 1990s for listed firms in the US and UK markets. This study analyzes such influences in both listed and unlisted European firms during 2002-2007. Our analysis suggests that shortterm PE investments have, on average, a detrimental effect on firm performance. The performance of a firm that has PE backing is lower than that of a firm without PE backing in the first year of PE investment. Such an effect disappears if PE investments remain in the firm for an uninterrupted six-year term

Keywords: Private equity financing; corporate finance (search for similar items in EconPapers)
JEL-codes: G24 G34 M14 (search for similar items in EconPapers)
Pages: 22 p.
Date: 2010
New Economics Papers: this item is included in nep-bec, nep-eur and nep-fmk
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Citations: View citations in EconPapers (1)

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https://www.diw.de/documents/publikationen/73/diw_01.c.354604.de/dp990.pdf (application/pdf)

Related works:
Working Paper: Does the tenure of Private Equity investment improve the performance of European firms? (2010)
Working Paper: Does the Tenure of Private Equity Investment Improve the Performance of European Firms? (2010)
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