Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175052
Authors: 
Ljungsqvist, Alexander
Persson, Lars
Tåg, Joacim
Year of Publication: 
2016
Series/Report no.: 
IFN Working Paper 1115
Abstract: 
Over the past two decades, private equity has contributed to a shrinking of the U.S. stock market. We develop a political economy model of private equity activity to study the wider economic consequences of this trend. We show that private and social incentives to delist firms from the stock market are not always aligned. Private equity firms could inadvertently impose an externality on the economy by reducing citizen-investors' exposure to corporate profits and thus undermining popular support for business-friendly policies. This can lead to long-term reductions in aggregate investment, productivity, and employment.
Subjects: 
Private equity
Political economy
Stock market
Delistings
Investment
Productivity
JEL: 
G34
G24
P16
Document Type: 
Working Paper
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