Working Paper No. 1115

Private Equity’s Unintended Dark Side: On the Economic Consequences of Excessive Delistings

Published: March 4, 2016, revised November, 2016Pages: 39Keywords: Private equity; Political economy; Stock market; Delistings; Investment; ProductivityJEL-codes: G34; G24; P16

Private Equity’s Unintended Dark Side: On the Economic Consequences of Excessive Delistings Alexander Ljungqvist, Lars Persson and Joacim Tåg


Over the past two decades, the U.S. stock market has been shrinking as the public firm model has begun to fall out of favor. We develop a political economy model of delistings to study the wider economic consequences of this trend. We show that the private and social incentives to delist firms from the stock market need not be aligned. Delistings can inadvertently impose an externality on the economy by reducing citizen-investors' exposure to corporate profits and thereby undermining popular support for business-friendly policies. By facilitating companies' departures from the stock market, private equity firms can trigger a chain of events that may lead to long-term reductions in aggregate investment, productivity, and employment.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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