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  3. October
  4. Team Stability and Performance: Evidence from Private Equity

Oct

05

Wednesday

Team Stability and Performance: Evidence from Private Equity

3.00pm

Seminars

Public

Speaker: Professor Francesca Cornelli (London Business School)

Series: Department of Economics Seminar Series 2016-17

We examine the effect of team turnover on performance studying the private equity industry. Using a unique data set that tracks over time teams in 138 PE managers and their performance, we uncover a positive relation between turnover and fund performance. We propose and confirm in the data two channels that explain our findings: i) in the short-run, performance improves when bad performers are fired, ii) in the long-run, turnover helps teams to adapt and replenish their skills in response to shifting external demand. We complement these findings showing that better PE firms fire a larger fraction of bad performing individuals, but also respond to recessions, when investment opportunities change, by updating their teams towards more operational skills. Our findings suggest that frictions coming from informational asymmetries may deter optimal turnover. These findings are surprising given the common belief among PE investors that team stability is key to long-term success.

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When & where

3.00pm - 4.30pmWednesday 5th October 2016

D220 Rhind Building City, University of London St John Street London EC1R 0JD United Kingdom

Contact Details

Sotiris Georganas

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City, University of London

Northampton Square

London EC1V 0HB

United Kingdom

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City, University of London is an independent member institution of the University of London. Established by Royal Charter in 1836, the University of London consists of 18 independent member institutions with outstanding global reputations and several prestigious central academic bodies and activities.