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The impact of private equity on firms' patenting activity

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Title: The impact of private equity on firms' patenting activity
Authors: Amess, K
Stiebale, J
Wright, M
Item Type: Journal Article
Abstract: The paper analyses the impact of private equity (PE) backed leveraged buyouts (LBOs) on innovative output (patenting). Using a sample of 407 UK deals we find that LBOs have a positive causal effect on patent stock and quality-adjusted patent stock. Our results imply a 6% increase in quality-adjusted patent stock three years after the deal. The increase in innovative activity is concentrated among private-to-private transactions with a 14% increase in the quality-adjusted patent stock. We also find evidence suggesting that PE firms facilitate the relaxation of financial constraints. In sum, our findings suggest that PE firms do not promote short-term cost-cutting at the expense of entrepreneurial investment opportunities with a long-term pay-off.
Issue Date: 14-Sep-2015
Date of Acceptance: 14-Sep-2015
URI: http://hdl.handle.net/10044/1/41896
DOI: https://dx.doi.org/10.1016/j.euroecorev.2015.08.013
ISSN: 1873-572X
Publisher: Elsevier
Start Page: 147
End Page: 160
Journal / Book Title: European Economic Review
Volume: 86
Copyright Statement: © 2015, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Keywords: Social Sciences
Economics
Business & Economics
Private equity
Leveraged buyout
Entrepreneurial buyouts
Innovation
RESEARCH-AND-DEVELOPMENT
FINANCIAL CONSTRAINTS
LEVERAGED BUYOUTS
PROPENSITY SCORE
CASH FLOW
GROWTH
INVESTMENT
INNOVATION
PERFORMANCE
MANAGEMENT
14 Economics
Publication Status: Published
Appears in Collections:Imperial College Business School