Private Equity?s Unintended Dark Side: On the Economic Consequences of Excessive Delistings

Alexander Ljungqvist (), Lars Persson and TÃ¥g, Joacim
Authors registered in the RePEc Author Service: Joacim Tåg

No 11075, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Over the past two decades, private equity has contributed to a shrinking of the U.S. stock market. We develop a political economy model of private equity activity to study the wider economic consequences of this trend. We show that private and social incentives to delist firms from the stock market are not always aligned. Private equity firms could inadvertently impose an externality on the economy by reducing citizen-investors? exposure to corporate profits and thus undermining popular support for business-friendly policies. This can lead to long-term reductions in aggregate investment, productivity, and employment.

Keywords: Delistings; investment; Political economy; Private equity; Productivity; stock market (search for similar items in EconPapers)
JEL-codes: G24 G34 P16 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (1)

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Working Paper: Private Equity's Unintended Dark Side: On the Economic Consequences of Excessive Delistings (2016)
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