Does private equity create wealth?

Here's a recent paper by Masulis and Thomas (Prof's of Finance and Law at Vanderbilt) posted on SSRN that has a look at the issue.

Abstract:

Private equity has reaped large rewards in recent years. We claim that one major reason for this success is due to the corporate governance advantages of private equity over the public corporation. We argue that the development of substantial derivative contracts and trading has significantly weakened the governance of public corporations and has created a need for financially sophisticated directors and much closer supervision of management. The private equity model delivers these benefits and allows corporations to be better governed, creating wealth gains for investors.