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Do Private Equity Owned Firms Have Better Management Practices?
- Source :
- American Economic Review. 105:442-46
- Publication Year :
- 2015
-
Abstract
- We use an innovative survey tool to collect management practice data from over 4,000 medium sized manufacturing firms across Asia, Europe and the US. These measures of managerial practice are strongly associated with firm-level performance (e.g. productivity, profitability and stock market value). Private Equity owned firms are significantly better managed than government, family and privately owned firms. Although they are also better managed on average than publicly listed firms with dispersed owners, this difference is not statistically significant. Looking at management practices in detail we find that Private Equity-owned firms have strong people management practices (hiring, firing, pay and promotions) but even stronger operations management practices (lean manufacturing, continuous improvement and monitoring). This suggests that Private Equity ownership is associated with broad based operational improvement in management rather than just stronger performance incentives. Finally, looking at changes in management practices over time, it appears that Private Equity targets poorly managed firms and these firms improve their management practices at a faster rate than other ownership types.
- Subjects :
- Finance
Economics and Econometrics
ComputingMilieux_THECOMPUTINGPROFESSION
business.industry
Restructuring
Venture capital
jel:G34
jel:G24
jel:O3
jel:G32
Club deal
jel:M2
Investment banking
jel:L2
jel:M10
Private equity
jel:O33
Economics
jel:O32
Profitability index
Stock market
management practices and private equity
business
Productivity
Subjects
Details
- Volume :
- 105
- Database :
- OpenAIRE
- Journal :
- American Economic Review
- Accession number :
- edsair.doi.dedup.....35b71d7a1242166b6be4894edc69443c