The Heterogeneous Effects of Buyouts on Job Quality

Investor returns could come at the expense of employee satisfaction and the authors show that employee satisfaction (compensation and culture) declines on average following LBOs. Long-tenure and lower-skill workers are most adversely affected. One-time layoffs do not fully explain the effects, but high-leverage deals are robustly correlated with them. Heightened uncertainty about job loss plays an important role in explaining the effects.