Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

The Effect of Leveraged Buyouts on Employment Growth and Productivity - Evidence From European LBOs

Shaba, Hidar LU and Siterius, Teo LU (2023) BUSN79 20231
Department of Business Administration
Abstract
Purpose: The purpose of this thesis is to investigate the post-buyout effect on employment
growth in LBOs relative to targets that were not subject to an LBO. Additionally, the study
aims to provide an up-to-date insight into the impact of employment productivity post-buyout
of the LBOs relative to non-LBOs, as the climate of buyouts have changed since its inception.

Methodology: The econometric methodology used is based upon balanced panel data. Pooled
OLS regressions and random effects using clustered standard errors was used to deal with
heteroskedasticity and partial endogeneity. Propensity score matching was used to deal with
possible selection bias when pairing LBOs with non-LBOs. Clustered standard errors by
... (More)
Purpose: The purpose of this thesis is to investigate the post-buyout effect on employment
growth in LBOs relative to targets that were not subject to an LBO. Additionally, the study
aims to provide an up-to-date insight into the impact of employment productivity post-buyout
of the LBOs relative to non-LBOs, as the climate of buyouts have changed since its inception.

Methodology: The econometric methodology used is based upon balanced panel data. Pooled
OLS regressions and random effects using clustered standard errors was used to deal with
heteroskedasticity and partial endogeneity. Propensity score matching was used to deal with
possible selection bias when pairing LBOs with non-LBOs. Clustered standard errors by
industry were used to capture potential industry effect that might not have been captured by
the initial clustered standard errors.

Empirical foundation: The thesis uses a final sample of 439 European LBOs that took place
between 2013-2016. Additionally, the matching methodology adds 1128 non-LBOs as a
control group.

Conclusions: The paper discovered that on average, European LBOs experienced a rise in
employment levels of around 7% in the pooled OLS mode and 3.4% in the random effects
model. Furthermore, the study also found that the average European buyout experienced a
decrease in labour productivity of around 3.3% and 3.7% within the same three-year period
post-buyout. The results were consistent across two different measurements of labour
productivity. The results are maintained after controlling for industry, year and firm controls. (Less)
Please use this url to cite or link to this publication:
author
Shaba, Hidar LU and Siterius, Teo LU
supervisor
organization
course
BUSN79 20231
year
type
H1 - Master's Degree (One Year)
subject
keywords
Employment growth, Labour Productivity, LBO, Private Equity, Buyouts
language
English
id
9132401
date added to LUP
2023-09-12 16:07:36
date last changed
2023-09-12 16:07:36
@misc{9132401,
  abstract     = {{Purpose: The purpose of this thesis is to investigate the post-buyout effect on employment 
growth in LBOs relative to targets that were not subject to an LBO. Additionally, the study 
aims to provide an up-to-date insight into the impact of employment productivity post-buyout
of the LBOs relative to non-LBOs, as the climate of buyouts have changed since its inception. 

Methodology: The econometric methodology used is based upon balanced panel data. Pooled 
OLS regressions and random effects using clustered standard errors was used to deal with 
heteroskedasticity and partial endogeneity. Propensity score matching was used to deal with 
possible selection bias when pairing LBOs with non-LBOs. Clustered standard errors by 
industry were used to capture potential industry effect that might not have been captured by 
the initial clustered standard errors.

Empirical foundation: The thesis uses a final sample of 439 European LBOs that took place 
between 2013-2016. Additionally, the matching methodology adds 1128 non-LBOs as a 
control group.

Conclusions: The paper discovered that on average, European LBOs experienced a rise in 
employment levels of around 7% in the pooled OLS mode and 3.4% in the random effects 
model. Furthermore, the study also found that the average European buyout experienced a 
decrease in labour productivity of around 3.3% and 3.7% within the same three-year period 
post-buyout. The results were consistent across two different measurements of labour 
productivity. The results are maintained after controlling for industry, year and firm controls.}},
  author       = {{Shaba, Hidar and Siterius, Teo}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Effect of Leveraged Buyouts on Employment Growth and Productivity - Evidence From European LBOs}},
  year         = {{2023}},
}