On the real effects of private equity investment: evidence from new ...

to Claessens and Laeven (2003), we replace the US industry characteristics with industrycharacteristics from other regions in some speci…cations.In Table 3, we compare the industry entry rates in the US to an aggregated measureof European entry from the Amadeus-EVCA dataset. In more than half of the industries,entry in the US is at least marginally higher than in Europe as a whole.2.4 Sample constructionWe employ the same sample selection procedure to the Amadeus dataset as Klapper et al.(2006) to see whether the e¤ect of private equity investment survives the inclusion of barriersto entry in a sample where these barriers were already shown to be signi…cant. We initiallyuse the 2001 edition of Amadeus and limit the sample to the years 1998 and 1999. The year2000 is not used due to some incompleteness of the information in each Amadeus editionconcerning the previous year. The years prior to 1998 are not used due to the well-knownsurvivorship problems of the Amadeus database: when a …rm ceases existing, Amadeus keepsa record of it for 4 years, and then takes it out of the database. Consequently, while eachyearly addition of Amadeus contains data for more than 4 years back, the sample of …rmsone will …nd reported for the time-period 4 years and more prior to the year of issuing, willnot include many …rms who existed in that year, but exited the market after that. Using thedata indiscriminately will therefore induce survivorship bias and misrepresent the volume ofentry, and so we focus our attention to the years 2 and 3 prior to the year the database wasissued. In later robustness tests, in which we use the 2008 edition of Amadeus, we similarlyfocus our attention on the sample of …rms in 2006-2007.Firms in the …nal dataset we use are also required to have basic accounting informationon the variables we are interested in (year of incorporation, employment, assets, etc.). Thisapproach excludes phantom …rms created for tax purposes. We drop …rms that report onlyconsolidated statements in order to avoid double-counting …rms and subsidiaries abroad.We exclude industries where the activities are country-speci…c, namely agriculture, forestry,…shing, and mining.We also exclude utilities and post and telecommunications, whichECBWorking Paper Series No 1078August 200915