Private Equity and Industry Performance in the Nordics : Can Private Equity investments affect the performance of its industry?

University essay from Linköpings universitet/Nationalekonomi; Linköpings universitet/Nationalekonomi

Author: Fredrik Urby; Christopher Albinsson; [2017]

Keywords: ;

Abstract: Private equity has many definitions and there are many perceptions of it. This study is inspired by a study from Bernstein, Lerner, Sorensen and Strömberg (2016), but with another geographic area, different set of measurements of performance and a different source of data. The main hypothesis is whether private equity investments can improve industry performance. This is tested using data from 162 industries in the Nordics and five financial ratios. Statistical significance tests are performed for all industries and together with an evaluation of the link between aggregated industry performance and private equity investments. A large ratio of the significance tests conducted were able to reject its null hypothesis, which is that the mean of the financial ratio for the industry with the private equity investment is higher compared to the mean of the same industry in the other Nordic countries without any private equity investment. The test, used to determine if there is a relationship between the number of private equity investments and industry performance using a chi squared-test, could as well reject its null hypothesis. This implies that there is a reason to believe that private equity investments in fact has an effect on industry performance.

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