Abstract
The general importance of social networks in financial markets is well established in the academic literature. Due to the relatively opaque nature of private equity markets, social networks may play a particularly important role in explaining a range of phenomena observed on these markets. Despite their likely fundamental role, social networks remain however scarcely studied. The relatively small literature has focused either on networks formed through educational ties or on networks formed through past employment experiences. This article surveys the academic research on the later form of networks: employment networks in private equity. Studies on this topic all have two ingredients in common: they all first set out to establish the existence of a particular form of employment-based network and they then assess whether the network is valuable or not for the various market actors. Consequently, this review begins by providing a short description of how the literature has identified employment networks. Next, is summarizes the main findings with a focus on the benefits and costs stemming from these networks.