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    Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad
    12 Feb 2018Working Paper Summaries

    Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad

    by Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, and Javier Miranda
    In 2014, the authors published an influential analysis of private equity buyouts in the American Economic Review. Recently, economists Brian Ayash and Mahdi Rastad have challenged the accuracy of those findings. This new paper responds point by point to their critique, contending that it reflects a misunderstanding of the data and methodology behind the original study.
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    Author Abstract

    Ayash and Rastad (2017) express several concerns about our 2014 analysis of private equity buyouts. We welcome their interest in our work but think their criticisms are off the mark. Some of their claims reflect a misunderstanding of the Census Bureau's Longitudinal Business Database (LBD) and its underlying data inputs. Because the LBD has emerged as a major laboratory for empirical studies in economics and finance, we use this opportunity to reiterate and clarify some of its important features. In a similar spirit, we elaborate on steps taken to develop our large sample of private equity buyouts. We also address Ayash and Rastad's remarks about the empirical design of our establishment-level analysis, our methods for distinguishing between leveraged buyouts (LBOs) and other private equity transactions, bankruptcy rates among firms acquired in LBOs, their assertion that we undercount large public-to-private LBOs, and other matters.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: January 2018
    • HBS Working Paper Number: HBS Working Paper #18-074
    • Faculty Unit(s): Finance; Entrepreneurial Management
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    Josh Lerner
    Josh Lerner
    Jacob H. Schiff Professor of Investment Banking
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