On the Real Effects of Private Equity InvestmentEvidence from New Business Creation

Using a comprehensive database of European firms, we study how private equityaffects the rate of firm entry. We find that private equity investment benefits newbusiness incorporation, especially in industries with naturally higher entry rates andR&D intensity. A two standard deviation increase in private equity investment explainsas much as 5.5% of the variation in entry between high-entry and low-entry industries.We address endogeneity by exploiting data on laws that...

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Year of publication:	2009-08-01
Authors:	Popov, Alexander ; Roosenboom, Peter
Institutions:	European Central Bank
Published in:	Working papers published in 2009 ECB Working Paper Series No 1078, August 2009
Subject:	Risikokapital \| risk capital \| Entrepreneurship \| Eigenkapital

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Abstract
Non-technical summary
1 Introduction
2 Data
2.1 EVCA yearbooks
2.2 Amadeus database
2.3 US industry-level entry data
2.4 Sample construction
3 Empirical methodology
4 Results
4.1 Private equity and entry: main results
4.2 Private equity and entry: contemporaneousvs. long-term effect
4.3 Alternative measures of propensity to entry
4.4 Private equity and access to fi nance
4.5 Endogeneity and selection
4.6 Robustness
5 Conclusion
References
Tables
Appendix
European Central Bank Working Paper Series

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