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Safer working in companies owned by venture capitalists
Monday, 26 March 2012
Employees in
companies owned by private equity firms have significantly lower risk
of unemployment and better wages according to a recent study.
Anyone who
works in a company owned by a private venture capital is 13 percent
less likely to lose their job than workers in other companies.
The effect
lasts for up to four years after that time the private equity firm
steps in a study of 201 private equity firms in Sweden during the years
1998-2004 show
The Institute
of Industrial Research which carried out the study points that "Our
study indicates that the Swedish venture capital market has not
profited at the expense of the employees. On the contrary, it seems to
have prevented unemployment and thereby contributed to the employees'
advantage, especially in the case of the weakest groups in the labour
market, "writes the author Martin Olsson and Joacim Train.
The study also
finds that wages grew by 1.4 percent more than in comparable companies
over four years of private equity control. The effect was widespread
across the wage scale.
The report
authors believe that better access to capital for private equity-owned
companies are the most likely explanation for why the risk of
unemployment for employees decreases. The theory is supported by the
threat that unemployment fell more in companies operating in capital
intensive industries.
"A credible
explanation for the reduced risk of unemployment is that venture
capital investment brought new capital to firms, thereby facilitating
new investment and development of the business, "writes Martin Olsson
and Joacim Train.
By Scancomark.se Team
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