Thursday, June 4, 6.00 pm, Room B217, LAPE, Université de Limoges

Barbarians on Capitol Hill? Private Equity and Government Contractors

Jonathan Brogaard, University of Utah

Iftekhar Hasan, Fordham University and Bank of Finland

ThuAnh La, Fordham University

Stefano Manfredonia, Fordham University

Abstract

We examine how private equity (PE) ownership affects competitive dynamics and their implications for product-market outcomes using U.S. government procurement as a laboratory. Using a stacked difference-in-differences design combined with propensity score matching, we find that PE-backed government contractors secure more contracts through investment growth and market expansion. However, this expansion crowds out competitors, increases market concentration, and does not lead to improved procurement performance; instead, PEbacked firms experience higher procurement delivery delays and cost overruns, leading to greater public expenditures. These adverse performance effects are concentrated among politically connected PE owners, consistent with rent extraction through enhanced bargaining power.