Standard Life Investments awards Corporate Governance prize in Stockholm

Standard Life Investments has awarded its annual Finance Prize to an academic paper which investigates the links between employment and private equity acquisitions.

The award, which comes with a €5,000 cheque, forms part of the 2012 European Corporate Governance Institute’s (ECGI) Working Paper Competition, the results of which were presented on April 26 at the ECGI Annual Dinner in Stockholm.

The winning paper from among 21 entries globally was a study entitled “Private Equity Takeovers and Employment in the UK: Some Empirical Evidence” by Noel O’Sullivan, Professor of Accounting at Loughborough University, Geoff Wood of Sheffield University and Mark Goergen of Cardiff University Business School.

It looks at the employment consequences of private equity acquisitions, in particular institutional buy-outs (IBOs), in the UK. It involves a pre- and post-acquisition analysis of employment and performance characteristics for a sample of acquired firms and a matched sample of non-acquired fi rms.

The study finds a significant decrease in employment in acquired firms in the year immediately after the completion of the IBO compared to the non-acquired fi rms. Further analysis fails to identify any parallel or subsequent increase in firm productivity or profitability. This evidence suggests that the observed downsizing has not been effective either in disciplining staff or imparting a clearer focus to activities.

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