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→LBO Effects on Innovation Papers
*post x change - an interaction between post and change in firm's patents in class
===Zahra 1995===
@article{zahra1995corporate,
title={Corporate entrepreneurship and financial performance: The case of management leveraged buyouts},
author={Zahra, Shaker A},
journal={Journal of business venturing},
volume={10},
number={3},
pages={225--247},
year={1995},
publisher={Elsevier},
abstract={Leveraged buyouts (LBOs) have created much controversy in the literature, centering on their potential effect on a company's ability to innovate, engage in new ventures, and support entrepreneurial projects. Some believe that post-LBO debt reduces the financial resources available for entrepreneurial activities. Conversely, others argue that, despite the burden of debt, some LBOs provide executives with an opportunity to innovate and take risks (Malone 1989). However, past studies have focused primarily on changes in R&D spending and ignored other corporate entrepreneurship (CE) activities a firm might pursue. Additionally, these studies have not documented the changes in CE after a management-led LBO. Thus, past studies offer only a snapshot of the effect of LBOs on CE. Finally, earlier studies did not directly examine the association between changes in entrepreneurial activities after the LBO and changes in performance.},
filename={Zahra (2015) - Corporate Entrepreneurship and Financial Performance The Case of Management Leveraged Buyouts}
}
Results from this study suggest that a company's commitment to corporate entrepreneurship (measured through innovation and venturing) increase after an LBO. Results also show that post-LBO changes in corporate entrepreneurship are associated with, or accompanied by concurrent changes in company performance.
Data:
47 LBO firms, data from annual reports, business week, compustat, dun's million dollar, interviews, commerce department publications, forbes, funk and scott, fortune, wall street journal
Data was measured with the following variables:
*Innovation
**R&D Spending
**R&D Focus (types, i.e. basic, applied, or developmental)
**radical product innovation
**product modification
**commercialization
**use of external R&D sources
**improving R&D staff quality
**increasing R&D staff size
*Venturing
**percent of revenue from new businesses or industries which showed a company's ability to expand operations to achieve profitability
**the number of new businesses the company has entered that showed an increase in the emphasis on redefining the company's business concept
**the number of new market segments served by the company that gauged the increase in the scope of operations
*company performance
**employee productivity
**sales-to-beginning assets, shows the company's ability to use its assets effectively
**return on investment
**earnings before interest and tax to assets ratio
*control variables
**technological opportunities, size, age, and level of debt
===Amess et al 2015===
@book{amess2015impact,
title={The Impact of Private Equity on Firm's Innovation Activity},
author={Amess, Kevin and Stiebale, Joel and Wright, Mike and others},
year={2015},
publisher={D{\"u}sseldorf Institute for Competition Economics (DICE)},
abstract={The paper analyses the impact of private equity (PE) backed leveraged buyouts (LBOs) on innovation 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 innovation activity is concentrated among private-to-private transactions with a 14% increase in the quality-adjusted patent stock. Further analysis supports the argument that PE firms facilitate the relaxation of financial constraints. We also rule out alternative explanations for portfolio firms’ higher patenting activity. Our findings suggest that PE firms do not promote short-term cost-cutting at the expense of entrepreneurial investment opportunities with a long-term payoff.},
filename={Amess et al (2015) - The Impact of Private Equity on Firms Innovation Activity}
}
The results show that PE-backed LBOs have a positive causal effect on both patenting and quality-adjusted patents measured by forward citations. This implies an increase in innovation activity rather than an increase in strategic patenting. The impact is predominantly driven by private to private LBO transactions. The findings are consistent with PE firm involvement relaxing financial constraints in firms, facilitating their investment in innovation activity.
Data:
Sources are the Center for Management Buyout Research, FAME, and PATSTAT. Data on PE firms and portfolio firms comes from CMBOR, which provides info on lbo deals. The FAME database provides financial and accounting data for UK firms. PATSTAT provides data on patent applications and citations in Europe. LBOs take place between 1998 and 2005. 407 UK deals.
*outcome variables
**patent applications
**patent applications weighted by forward citations i.e. changes in innovation stocks over time
*conditioning variables
**firm size (the log of sales)
**labour productivity (the log of sales per employee)
**exporting (an exporter dummy)
**skill intensity (the log of the average wage)
**debt (liabilities divided by equity, i.e. leverage)
**profitability (profit divided by sales)
**age (log firm age)
=LBO Traits/Incidence/Phenomena Papers=
