Private Equity's Unintended Dark Side: On the Economic Consequences of Excessive Delistings / Alexander Ljungqvist, Lars Persson, Joacim Tåg.

Format:

Book

Author/Creator:

Ljungqvist, Alexander.

Contributor:

National Bureau of Economic Research.

Persson, Lars.

Tåg, Joacim.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21909.

NBER working paper series no. w21909

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Private Equity's Unintended Dark Side

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Over the past two decades, the U.S. stock market has been shrinking as the public firm model has begun to fall out of favor. We develop a political economy model of delistings to study the wider economic consequences of this trend. We show that the private and social incentives to delist firms from the stock market need not be aligned. Delistings can inadvertently impose an externality on the economy by reducing citizen-investors' exposure to corporate profits and thereby undermining popular support for business-friendly policies. By facilitating companies' departures from the stock market, private equity firms can trigger a chain of events that may lead to long-term reductions in aggregate investment, productivity, and employment.

Notes:

Print version record

January 2016.