This paper surveys the academic literature about the impact of private equity investments in the broader economy. Private equity fund managers respond to high-powered incentives and seek to maximize shareholder values via a variety of channels. The literature identifies two broad approaches to value creation taken by private equity funds with sharply divergent outcomes for stakeholders and the aggregate economy, and this paper considers both.
Morten Sorensen, Dartmouth, Tuck School of Business; NBER
Ayako Yasuda, UC Davis Graduate School of Management