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  • P-ISSN 2586-2995
  • E-ISSN 2586-4130

KDI Journal of Economic Policy. Vol. 38, No. 2, May 2016, pp. 21-44

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Private Equity as an Alternative Corporate Restructuring Scheme: Does Private Equity Increase the Operating Performance of PE-Backed Firms?


Author & Article History

Manuscript received 18 January 2016; revision received 19 January 2016; accepted 26 April 2016.


There has been a surge of interest in private equity as an alternative corporate restructuring scheme to complement the current institutional forms such as workouts and court receivership. By empirically examining whether private equity in Korea can improve investee companies, we find that while private equity in Korea did not sacrifice the long-term growth potential of investee firms, it did not improve their profitability (e.g. ROA, ROE, and ROS) or growth (e.g. sales growth) either. Both the negative correlation between business performance and firm age and our empirical results showing that young firms were favored by private equity for investment imply that Korean private equity may perform as growth capital, similar to venture capital rather than as buyouts for corporate restructuring.


private equity, corporate restructuring, business performance, buyouts, growth capital

JEL Code

G34, G32, H25

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