The Impact of Macroeconomic Factors on Private Equity Investments : A study conducted to analyze how macroeconomic factors affect the amount of private equity invested in countries

Abstract

This study examines how different macroeconomic factors affects the PE activity in countries. To study this, data was gathered for 49 countries from all over the world, and analysed using the statistical tool SPSS. The amount of PE invested in a country has been used to measure PE activity, and this number was divided by GDP to correct for difference in size of economies. The data was gathered from several secondary sources which are considered to be reliable, and put in to one table. Several statistical analyses were conducted, with the main focus of multiple linear regression analysis. From the analysis, two factors appeared to be significant for the PE activity in a country. The first factor was transparency level. The higher level of transparency a country has in its public sector, the lower is the level of perceived corruption. The analysis showed that there is a clear positive relationship between transparency and investment activity in a country. The second factor was legal system, which differed between common law and civil law. The analysis showed that the investment activity is significantly higher in common law countries.