Kellard, Neil M and Kontonikas, Alexandros and Lamla, Michael and Maiani, Stefano (2022) Deal or No Deal? Modelling the Impact of Brexit Uncertainty on UK Private Equity Activity. British Journal of Management, 33 (1). pp. 46-68. DOI https://doi.org/10.1111/1467-8551.12479
Kellard, Neil M and Kontonikas, Alexandros and Lamla, Michael and Maiani, Stefano (2022) Deal or No Deal? Modelling the Impact of Brexit Uncertainty on UK Private Equity Activity. British Journal of Management, 33 (1). pp. 46-68. DOI https://doi.org/10.1111/1467-8551.12479
Kellard, Neil M and Kontonikas, Alexandros and Lamla, Michael and Maiani, Stefano (2022) Deal or No Deal? Modelling the Impact of Brexit Uncertainty on UK Private Equity Activity. British Journal of Management, 33 (1). pp. 46-68. DOI https://doi.org/10.1111/1467-8551.12479
Abstract
Given uncertainty in policy, particularly around Brexit, how do private equity (PE) firms investing in the UK behave? Analysing their response is vital for understanding the impact on investment per se and designing policy that limits uncertainty. Building on the recent work of Mike Wright and co‐authors, we explore the effect of uncertainty measures on UK PE activity and the channels that transmit uncertainty to the PE market. After developing hypotheses that link the ‘PE activity and uncertainty’ relation via a real options, interim risk or moral hazard channel, we employ a novel dataset on PE targets and non‐targets over the 2010–2019 period. We find that uncertainty, especially new measures closely aligned to Brexit, have negatively affected PE activity in the UK. Moreover, the transmission of such uncertainty occurs primarily through the real options channel and through greater uncertainty arising from prolonged interim periods of PE deals (i.e. the interim risk channel). Our results imply that the present and ongoing uncertainty in Brexit policy will continue to depress PE activity and by extension, investment and growth in the UK. Policymakers are urged to resolve such uncertainties.
Item Type: | Article |
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Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 22 Feb 2021 13:22 |
Last Modified: | 16 May 2024 20:42 |
URI: | http://repository.essex.ac.uk/id/eprint/29890 |
Available files
Filename: 1467-8551.12479.pdf
Licence: Creative Commons: Attribution 3.0