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The impact of private equity on firms׳ patenting activity

Amess, Kevin; Stiebale, Joel; Wright, Mike

Authors

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.

Journal Article Type Article
Journal European Economic Review
Print ISSN 0014-2921
Electronic ISSN 0014-2921
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 86
APA6 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
DOI https://doi.org/10.1016/j.euroecorev.2015.08.013
Keywords Private equity; Leveraged buyout; Entrepreneurial buyouts; Innovation
Publisher URL http://www.sciencedirect.com/science/article/pii/S0014292115001300
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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