By: Politico

Republican views are good for business, a new Stern School of Business study has found.

Stern visiting assistant professor of management Aviad Pe’er, along with Oliver Gottschalg of HEC School of Management in Paris, found that companies in red states have better results in buyouts, which is when companies buy other firms, rearrange and streamline the management then sell them for a profit.

Pe’er and Gottschalg’s research analyzed 5,870 different buyouts by private equity firms from 1980 to 2003. They used the presidential election results between 1988 and 2004 to average the political tendencies of the state.

Their studies concluded that companies in the red states are 10 percent more likely to be bought out.

Pe’er believes this is because companies in red states generally have a fewer people in charge, which makes them more streamlined.

Pe’er does not believe that President-elect Barack Obama’s presidency will have a big effect on the number of buyouts but said that the financial crisis creates greatly profitable opportunities for buyouts, Pe’er said.

“We are in a situation with something else that hasn’t happened for 20 to 30 years. We believe that the financial crisis by itself creates huge opportunities,” Pe’er said.

But these opportunities will not include increased job opportunities for Stern graduates, he said.

“Buyout funds are very, very small. They are not hiring people, generally speaking, right after business school. They are looking for specific experiences or specific contacts a person might have,” Pe’er said.

With the economic crisis, many Stern students are concerned this will mean even fewer job opportunities, which will be compounded with rising school costs.

“I’m a finance major; I’m extremely worried about jobs. There [are] going to be more mergers and acquisitions soon,” Stern graduate student Amanda Chen said. “I’m worried that, by the time I graduate, there’s not going to be enough banks left out there to hire me.”

While political views are not the only factor in successful buyouts, Pe’er predicts that continued economic troubles will lead to even greater buyout activity in red states in the coming years.

Kelly Roberts reports for the Washington Square News, a student publication at New York University. The Washington Square News is partnering with Campus Politico for the 2008 elections.

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