Abstract

We examine the performance of PE-backed firms following their IPOs during the expansionary period of the early 2000s and their performance during the “great recession.” We employ a control group using multi-digit NAICS codes, which allows us to match firms much more closely than prior studies. The results during the market expansion of the early decade parallel those of the existing literature, showing PE-backed firms perform as well or better than non-PE-backed firms. However, while those studies conclude that IPOs are generally a positive addition to the market and its investors, we show their performance is significantly worse than their non-PE-backed peers during the great recession, suggesting the success of these firms is particularly dependent on the state of the economy.

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