The 13 reference contexts in paper Oleg Badunenko, Christopher F. Baum, Dorothea Schäfer (2010) “Does the tenure of Private Equity investment improve the performance of European firms?” / RePEc:boc:bocoec:730

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    Keywords: Private equity financing, corporate finance JEL Classification: M14, G24, G34 1 Introduction In the late 1960s and 1970s, U.S. companies’ growth strategyfocused on the goals of a stable cash flow and a constant dividend
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    (Toms and Wright(2005);
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    Jensen(1988,1993), andWilliamson,1967). To this end, firms became increasingly diversified. More and more new lines of business were added through internal growth or acquisition. In the early 1980s, the multi-divisional holding structure, the so-called M-form, dominated.
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    More and more new lines of business were added through internal growth or acquisition. In the early 1980s, the multi-divisional holding structure, the so-called M-form, dominated. Many companies had well over 100 individual lines of business andhundreds of subsidiaries
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    (Toms and Wright,2005).
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    The characteristic feature of the U.S. industrial landscape in that era was the huge conglomerate with stable income, broad dispersion of ownership and weak management control: a scenarioJensen(1991) described as “complacent corporate America”.
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    feature of the U.S. industrial landscape in that era was the huge conglomerate with stable income, broad dispersion of ownership and weak management control: a scenarioJensen(1991) described as “complacent corporate America”. During the 1980s, the picture changed. A major restructuring wave arose, fed primarily through a variety of hostile takeovers financed by theinnovation of “junk bonds”.
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    Mitchell and Mulherin(1996)
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    estimate that from 1982 to 1989, 57 percent of all U.S. listed firms were targets of takeover attempts. Private equity lenders contributed substantial resources to this restructuring wave.Toms and Wright(2005) state that 32 percent of acquisitions in the 1979–1999 period involved leveraged buyouts (LBOs).
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    Mitchell and Mulherin(1996) estimate that from 1982 to 1989, 57 percent of all U.S. listed firms were targets of takeover attempts. Private equity lenders contributed substantial resources to this restructuring wave.
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    Toms and Wright(2005)
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    state that 32 percent of acquisitions in the 1979–1999 period involved leveraged buyouts (LBOs). During that era of “masters of the universe” in the U.S., these massive corporate restructurings were accompanied by political debate and serious concerns were expressed in public opinion polls.
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    The empirical results are presented and discussed in Section4, while Section5concludes. 2 Literature review on performance studies: the impact of active PE investors from the 1980s The literature attempts to identify the influence of privateequity investors on different measures of firm performance. For example,
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    Kaplan(1989)
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    investigates the operating effect that 48 management buyouts had in the first half of the 1980s. He considers firms that were previously listed on the New York Stock Exchange and compares their performance before and after a large buyout: a transaction exceeding 50 million US dollars.
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    He considers firms that were previously listed on the New York Stock Exchange and compares their performance before and after a large buyout: a transaction exceeding 50 million US dollars. His findings suggest a significant increase in operating returns. He claims that management buyouts generally bring positive improvements to the firm’soperations and increase its value.
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    Smith(1990)
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    finds that between 1977 and 1986, the operating returns of 58public firms have significantly increased from its value year beforecompletion of buyout and the year after.Lichtenberg and Siegel(1990) utilize a much larger plant-level database of 12,000 listed as well as unlisted manufacturing firms.
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    He claims that management buyouts generally bring positive improvements to the firm’soperations and increase its value.Smith(1990) finds that between 1977 and 1986, the operating returns of 58public firms have significantly increased from its value year beforecompletion of buyout and the year after.
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    Lichtenberg and Siegel(1990)
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    utilize a much larger plant-level database of 12,000 listed as well as unlisted manufacturing firms. As in the two previous studies, they also analyzed how pre-buyout performance, measured astotal factor productivity, compares to that of the after-buyout period.
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    As in the two previous studies, they also analyzed how pre-buyout performance, measured astotal factor productivity, compares to that of the after-buyout period. They suggest that the productivity is superior in the first three years after the buyout occurred, but differences vanish after the third year.
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    Smart and Waldfogel(1994)
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    apply a different methodology to 48 firms ofKaplan’s database, but come to the same conclusions that management buyouts have a positive effect on corporate performance. Van de Gucht and Moore(1998) look at 483 large (more than 100 million dollars) LBO transactions completed during 1980−1992 and find that share prices rise after a leveraged 4 buyout is completed.
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    Van de Gucht and Moore(1998) look at 483 large (more than 100 million dollars) LBO transactions completed during 1980−1992 and find that share prices rise after a leveraged 4 buyout is completed. In a sample that spans further in time to1990s (starting in 1967),
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    Jelic et al.(2005)
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    assess financial performance of 167 management buyouts listed on the London Stock Exchange. They compare management buyouts backed by venture capital with non-venture capital backed counterparts and find no significant difference in the long run.
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    In a sample that spans further in time to1990s (starting in 1967), Jelic et al.(2005) assess financial performance of 167 management buyouts listed on the London Stock Exchange. They compare management buyouts backed by venture capital with non-venture capital backed counterparts and find no significant difference in the long run.
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    Ames(2002)
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    analyzes UK management buyouts over the period 1986−1997. His findings suggest higher levels of post-buyout firm-levelproductivity. Wright et al.(1996) compare the performance of 251 UK buyouts and 446 non-buyouts tracked for up to six years after the buyout.
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    They compare management buyouts backed by venture capital with non-venture capital backed counterparts and find no significant difference in the long run.Ames(2002) analyzes UK management buyouts over the period 1986−1997. His findings suggest higher levels of post-buyout firm-levelproductivity.
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    Wright et al.(1996)
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    compare the performance of 251 UK buyouts and 446 non-buyouts tracked for up to six years after the buyout. They find that buyouts yielded significantly larger return on assets, and display on average a 9 per cent greater productivity effect over years 2 to 6, post-buyout, compared to non-buyouts.
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    funding (6720), Activities auxiliary to insurance and pension funding (6720), Business and management consultancy activities (7414), Management activities of holding companies (7415), Call center activities (7486), or Other business activities n.e.c. (7487). 2A subscription to “private equity info” was acquired athttp://www.privateequityinfo.com. 3For a detailed description of these data see
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    Beck et al.(2000)
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    andhttp://go.worldbank.org/ X23UD9QUX0. 8 Table 2−Continued year mean sd p25 p50 p75N Spell of PE, years, for cases where PE is present 200210111137 2003 1.17 0.38111383 2004 1.47 0.64112447 2005 1.67 0.86112697 2006 1.78 1.031121116 2007 1.78 1.161121501 Total 1.65 0.981124281 Ultimate owner (0/1) 2002 0.7 0.4601113394 2003 0.66 0.4801115836 2004 0.5
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    First, it would be interesting to look at the impact of PE presence on firm performance against the backdrop of the economic crisis of 2007–2009. Second, it is important to explore other aspects of firm 8A recent study of
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    Bernstein et al.(2010)
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    explored the impact of aggregate PE activity within an industry on industry performance. They claim that industries where PE funds have invested in the past five years experience higher growth, and that PE activity has not caused a higher exposure of the industry to aggregate shocks. 9http://www.chicagobooth.edu/news/2009-05-29-pe.aspx. 19 performance, such as defaults of portfolio firms, firms’ i
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