Working Paper Series
Private Equity’s Unintended Dark Side: On the Economic Consequences of Excessive Delistings
(), Lars Persson
() and Joacim Tåg
Abstract: 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.
Keywords: Private equity; Political economy; Stock market; Delistings; Investment; Productivity; (follow links to similar papers)
JEL-Codes: G24; G34; P16; (follow links to similar papers)
39 pages, March 4, 2016, Revised November 23, 2016
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom