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...