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'''====Steve Kaplan'''==== Steve said:
'''====Josh Lerner'''==== Josh said:
'''====Heitor Almeida''':==== "Very nice paper. If I remember correctly Lerner et al. did not have a control group, so the results were a bit questionable. it is nice to show that relative to a control group LBOs reduce innovation. Two quick reactions:"
The Effect of Leverage Buyouts on Innovation (view source)
Revision as of 17:01, 10 July 2020
, 17:01, 10 July 2020→Addressing Concerns
===Beyond JF===
*Seems consistent with Davis et al. for public-to-privates.
*Would spend more time explaining how it differs from the recent Cumming et al paper. Results seem effectively the
Of course, our paper is not consistent with Davis, at least concerning their findings on TFP gains. And we do differentiate our paper from Cummings. We could perhaps differentiate it further though.
#Certainly, our work on PE and jobs, productivity, etc. suggests that public-to-private deals are real outliers relative to other transactions along many dimensions. Would it make sense to look at a broader spectrum of deals? Another advantage is that it would substantially increase your sample size.
#Seagate is a real outlier. As you saw in our paper, we excluded it. How do you handle it? Or do you not include it in your sample?
*Yes, we can look at R&D filings and we did!
#The obvious endogeneity concern is that for some reason private equity will target firms that are expected to reduce innovation (that is, innovation would have decreased irrespective of the LBO). it is impossible to completely address it, but it may be useful to discuss explicitly and perhaps try to look at whether innovation "predicts" LBOs. For example, perhaps firms with low R&D are more likely to be targeted, and this reduces innovation post-LBO.
#There is an alternative measure of innovation that looks at the market value of granted patents (Kogan et al., QJE). If it is the case that LBOs reduce the total value of innovation, that would add to your points.
===JF Rejection===
The paper was rejected by Amit Seru, though he was nicer than the AE or the reviewers. His ====Amit Seru==== Amit's comments were as follows (emphasis added):
Thank you for submitting your paper, MS 2019-0353, "The Effect of U.S. Public-to-Private Leveraged Buyouts on Innovation," for publication in the Journal of Finance. I have now received excellent feedback on your paper from two referees. The referee reports are attached to this email. Both referees recommend that I reject the paper. The AE also recommends a rejection. The main concerns of reviewing team center around the marginal contribution of the study and its empirical execution.
*The main weakness was the "opaqueness of the methodology". We need to fix this.
*One instrument would be withdrawn LBOs, providing that they were withdrawn due to a change in market conditions, and not their innovation profile (C.f. Bernstein? -- his job market paper was on withdrawn IPOs and landed him a job at Stanford in around 2012).
====Reviewer 1====
'''Select comments from Reviewer 1''' (uses terminology like 'forward citation' and doesn't understand 'synthetic controls'):
*Clean up the description of the sample, etc.
*Let's strip down and/or clean up the theories. They aren't the main selling point. We just need a value creation story and a value consumption story.
====Reviewer 2====
Select comments from Reviewer 2 (likely one of Lerner, Sorenson, or Stromberg):
