Managerial incentives and value creation: Evidence from private equity, Stanford University working paper

We analyze the differences between companies owned by private equity (PE) investors and similar public companies. We document that PE-owned companies provide higher managerial incentives to their top management: CEOs have almost twice as much equity, 10 % lower salary, and more cash compensation than their counterparts at comparable public corporations. We also find some evidence that PE ownership is related to improvements in operational efficiency and profitability. However, any differences between PE-owned companies and public companies disappear over a very short period (one to two years) after the PE-owned firm goes public