The incentives that drive PE firms have an interesting by-product: a reduction in income inequalities, such as the gender wage gap
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After the global financial crisis, private equity (PE) ownership was much maligned. Among other things, it has been blamed for the demise of Toys “R” Us, Payless Shoes and RadioShack. Even pop star Taylor Swift called out “the unregulated world of private equity” when accepting Billboard’s “Woman of the Decade” award in 2019.
While there is ample evidence that PE firms excel in increasing the performance and efficiency of their portfolio companies, the question is: Do the benefits that accrue to shareholders come at the expense of other stakeholders, such as the workers, especially the most vulnerable ones?
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