Religious belief and private equity risk may actually be linked.
In a study comparing the number of churchgoers in US counties with the headquarters locations of US companies bought by private equity sponsors, Dr. Oliver Gottschalg found that in areas where people go to church often, one sees far fewer buyouts. Moreover, the buyouts in those areas that do take place are significantly less likely to go “bust.”
Is this really because of religion? In his study, Dr. Gottschalg controls for other factor affecting buyout risk and points to academic studies that indicate religious belief is a proxy for risk aversion. In other words, religious people are “hedging their bets for the afterlife.”
So, should GPs make sure their CEOs are devout?
Watch Dr. Gottschalg discuss this study – one of his more “esoteric and original” topics – and PE risk in general in a panel at the SuperInvestor’s recent conference in Berlin.