The impact of private equity on firms׳ patenting activity

Kevin Amess (), Joel Stiebale and Mike Wright

European Economic Review, 2016, vol. 86, issue C, 147-160

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.

Keywords: Private equity; Leveraged buyout; Entrepreneurial buyouts; Innovation (search for similar items in EconPapers)
JEL-codes: D22 G32 G34 L26 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:86:y:2016:i:c:p:147-160

DOI: 10.1016/j.euroecorev.2015.08.013

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