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The impact of private equity on firms? patenting activity

Amess, Kevin; Stiebale, Joel; Wright, Mike

Authors

KEVIN AMESS kevin.amess@nottingham.ac.uk
Professor of Managerial Economics

Joel Stiebale

Mike Wright



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.

Citation

Amess, K., Stiebale, J., & Wright, M. The impact of private equity on firms? patenting activity. European Economic Review, 86, https://doi.org/10.1016/j.euroecorev.2015.08.013

Journal Article Type Article
Online Publication Date Sep 14, 2015
Deposit Date Mar 4, 2016
Publicly Available Date Mar 29, 2024
Journal European Economic Review
Print ISSN 0014-2921
Electronic ISSN 0014-2921
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 86
DOI https://doi.org/10.1016/j.euroecorev.2015.08.013
Keywords Private equity; Leveraged buyout; Entrepreneurial buyouts; Innovation
Public URL https://nottingham-repository.worktribe.com/output/761338
Publisher URL http://www.sciencedirect.com/science/article/pii/S0014292115001300

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