Analysing the uneven development of private equity in Europe: Legal origins and diversity of capitalism

N. Bedu and Matthieu Montalban
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Matthieu Montalban: GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique

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Abstract: Based on the literature on the diversity of capitalism (DoC) and legal origin (LO), this article examines the role of institutional configurations in the uneven development of private equity (PE) in 18 European countries. The article shows that developed stock markets, the ability of limited partners (insurance companies) to invest in LBO funds and low employment protection are more important determinants than investor protection in the case of LBO investments. However, venture capital (VC) investments are found to be positively associated with investor protection but also with developed stock markets and favourable tax rates for managers. R&D tax incentives for investee companies are found to have a negative impact on VC investments, which are nonetheless promoted by public R&D expenditures. Even if national institutional configurations matter in explaining differences, as emphasised by LO and DoC, we observe a common trend in PE development and financialisation.

Keywords: Europe; Financial institutions; Financialisation; Institutional complementarity; Law; Varieties of capitalism (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

Published in Socio-Economic Review, 2014, 12 (1), pp.33-70. ⟨10.1093/ser/mwt011⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03141643

DOI: 10.1093/ser/mwt011

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