Journal of Corporate Finance 13 (2007) 439 – 460 www.elsevier.com/locate/jcorpfin

Private equity, leveraged buyouts and governance ☆
Douglas Cumming a,⁎, Donald S. Siegel b,1 , Mike Wright c,2 a Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario, Canada M3J 1P3 b A. Gary Anderson Graduate School of Management, University of California at Riverside, 225 Anderson Hall, Riverside, CA 92521, United States c Centre for Management Buyout Research, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham, NG8 1BB, UK Available online 24 May 2007

Abstract This paper provides an overview of the literature on private equity and leveraged buyouts, focusing on global evidence related to both governance and returns to private equity and leveraged buyouts. We distinguish between financial and real returns to this activity, where the latter refers to productivity and broader performance measures. We also outline a research agenda on this topic. © 2007 Elsevier B.V. All rights reserved.
JEL classification: G34; G32 Keywords: Management buyouts; Private equity; Total factor productivity; Financial and real returns; Corporate governance

1. Introduction The recent resurgence of leveraged buyouts (henceforth, LBOs) and the concomitant rise of “private equity” markets in the U.S. and internationally, has been accompanied by renewed concerns about their effects (e.g. Financial Services Authority, 2006). These concerns emphasize a need to evaluate the impact of these transactions on organizations and society. Researchers
☆ We warmly thank Michael Jensen for his contribution to the conference held at RPI in April 2006, at which the papers presented in this special issue were presented, and for his insightful comments and suggestions on an earlier version of this paper. ⁎ Corresponding author. Tel.: +1 518 276 2758. E-mail addresses: Douglas@Cumming.com (D. Cumming), Donald.Siegel@ucr.edu (D.S. Siegel),