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

Oleg Badunenko, Christopher Baum and Dorothea Schäfer

No 3.3, Working Paper / FINESS 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 short-term 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: 21 p.
Date: 2010
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Citations: View citations in EconPapers (1)

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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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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwfin:diwfin3.3

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