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=LBO Effects on Innovation Papers=
===Lerner et al 2011===
@article{lerner2011private,
title={Private equity and long-run investment: The case of innovation},
author={Lerner, Josh and Sorensen, Morten and Str{\"o}mberg, Per},
journal={The Journal of Finance},
volume={66},
number={2},
pages={445--477},
year={2011},
publisher={Wiley Online Library},
abstract={A long-standing controversy is whether leveraged buyouts (LBOs) relieve managers from short-term pressures from public shareholders, or whether LBO funds themselves sacrifice long-term growth to boost short-term performance. We examine one form of long-run activity, namely, investments in innovation as measured by patenting activity. Based on 472 LBO transactions, we find no evidence that LBOs sacrifice long-term investments. LBO firm patents are more cited (a proxy for economic importance), show no shifts in the fundamental nature of the research, and become more concentrated in important areas of companies' innovative portfolios.},
filename={Lerner et al (2011) - Private equity and long run investment the case of innovation}
}
Finds that patents private equity backed firms applied for in the years after the investment are more frequently cited, showing no deterioration in patent orginality and generality. The level of patenting does not appear to consistently change, and the firms' patent portfolios become more focused in the years after the private equity investments. The areas where the firms concentrate their patenting after the private equity investment, and the historical strengths of the firm, tend to be the areas where the increase in patent impact is particularly great.
Data:
Capital IQ data, Dealogic data, SDC VentureXpert, and compilations of news stories to identify private equity transactions, their characteristics, and the nature of their exits. 472 LBO transactions between jan 1980 and december 2005.
Used Harvard business school patent database, which contains U.S. patent and trademark office electronic records through may 2007. HBS patent database was researched and cleaned up version of USPTO database.
Final sample consists of 6398 patents from 472 firms granted from 1984 through may 2007.
Variables:
*secondary exit - an LBO backed firm subsequently sold to another private equity fund
*IPO - an lbo backed firm subsequently going public
*trade sale - an lbo backed firm sbusequently being acquired by a strategic buyer
*bankruptcy - an lbo backed firm subsequently filing for bankruptcy
*event year - indicator variables that equal one for the given year in event time (the base year is year 0)
*post - an indicator variable that equals one for event years 1 and forward
*post plus one - an indicator variable that equals one for event years 2 and forward
*share of firm's preinvestment patents in class - the fraction of the firms' pretransaction patents that are in the same industry class
*change in firm's patents in class - an indicator for whether the difference in the share of patents in the class between the pre- and posttransaction periods is positive
*post x share - an interaction between post and share of firm's pre-investment patents in class
*post x change - an interaction between post and change in firm's patents in class
=LBO Traits/Incidence/Phenomena Papers=
=Innovation Factors/Phenomena Papers=
==Jake==
