ECGI Research Newsletter

The ECGI publishes a Research Newsletter up to three times a year, focusing on a topical corporate governance issue and drawing on published papers in our Finance and Law Working Paper series. Each edition usually comprises a digest of the major themes from these papers, comments from leading academics and practitioners and a synopsis of a relevant book by one of our Research members.

A copy of each edition of the Newsletter is sent to all ECGI members and is subsequently be available in electronic form here on the ECGI website. We trust that you will find it informative, useful and enlightening in the ongoing corporate governance debate.

The sixth edition of the ECGI Research Newsletter, focuses on the arguably contentious area of private equity. During the recent bull market, the private equity industry grew at a rapid rate. Now, with economies in recession worldwide, some of the deals struck at its height look expensive. Indeed, private equity is seen by some to have contributed substantially to the leveraging of the world economy. Companies that were taken private may need refinancing and unless the financial system starts functioning again, many may go into insolvency. The current credit crisis is the ultimate stress test for the private equity industry. This newsletter reviews private equity research that was carried out before the credit crisis. This research deals with the fundamental questions that have made private equity controversial. Are private equity buyouts a financial scheme to plunder companies or do they add value by bringing outside expertise, managerial incentives and the will to take difficult decisions to companies?