Private equity firms, such as Blackstone and Kohlberg Kravis Roberts

Private equity firms, such as Blackstone and Kohlberg Kravis Roberts & Co., search for firms where the managers appear not to be maximizing profits. A private equity firm can buy stock in these firms and have its employees elected to the firms' boards of directors and may even acquire control of the targeted firm and replace the top management. Does the existence of private equity firms reduce any problems in corporate governance? Briefly explain.

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