| dc.description.abstract | This study provides an extensive analysis of the Nordic private equity market and investment
activity. The analysis commenced with a comparative analysis of Nordic countries with
Anglo-Saxon markets and other developed European nations in terms of market conditions
and investment levels. The initial findings indicated that the Nordic private equity market
outperformed most European peers yet fell short of matching the development observed
within Anglo-Saxon markets. This assessment led to the notion that the factors influencing
investment activity in foreign markets may not translate directly to the Nordic context.
Consequently, the primary research question evolved to examine the specific determinants
shaping private equity investments in the Nordic region.
The study analyzed the investment activity of domestic Nordic private equity funds utilizing a
longitudinal dataset for Denmark, Finland, Norway, and Sweden in the period 2007-2019.
The investment activity was measured using the overall private equity investment value in
addition to venture capital, buyout, and growth & turnaround capital. The study was oriented
around five principal dimensions: the investment environment, economic conditions, the labor
market, research & development, and tax rates. The dataset incorporated 13 explanatory
variables, each embodying various facets of these dimensions. The variables were analyzed
using a random effects model with and without time-fixed effects.
The analysis identified ten variables as significant determinants of private equity activity in
the Nordic region. Our findings emphasized the pivotal role of labor market conditions in
shaping private equity activity, with a key driver being fewer regulatory restrictions in the
utilization of temporary workers. Moreover, certain elements within the investment
environment, particularly stock market liquidity, initial public offerings, and the prevalence of
large firms in relation to small and medium-sized enterprises, were recognized as relevant
drivers. Interestingly, the corporate tax rate was positively correlated with private equity
investments, which contradicts common expectations. Research & development typically
exhibited a negative correlation with the dependent variables under consideration. Lastly, the
economic conditions dimension had the least influence on private equity investments, with
only the long-term interest rate demonstrating a significant association. | en_US |
