NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Private Equity and Long-Run Investment: The Case of Innovation

Josh Lerner, Morten Sørensen, Per Strömberg

NBER Working Paper No. 14623
Issued in December 2008
NBER Program(s):   CF   PR

A long-standing controversy is whether LBOs relieve managers from short-term pressures from public shareholders, or whether LBO funds themselves are driven by short-term profit motives and sacrifice long-term growth to boost short-term performance. We investigate 495 transactions with a focus on one form of long-term activities, namely investments in innovation as measured by patenting activity. We find no evidence that LBOs are associated with a decrease in these activities. Relying on standard measures of patent quality, we find that patents granted to firms involved in private equity transactions are more cited (a proxy for economic importance), show no significant shifts in the fundamental nature of the research, and are more concentrated in the most important and prominent areas of companies' innovative portfolios.

download in pdf format
   (260 K)

email paper

This paper is available as PDF (260 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14623

Published: Josh Lerner & Morten Sorensen & Per Strömberg, 2011. "Private Equity and Long‐Run Investment: The Case of Innovation," Journal of Finance, American Finance Association, vol. 66(2), pages 445-477, 04. citation courtesy of

Users who downloaded this paper also downloaded these:
Davis, Haltiwanger, Jarmin, Lerner, and Miranda w17399 Private Equity and Employment
Kaplan and Stromberg w14207 Leveraged Buyouts and Private Equity
Bernstein, Lerner, Sorensen, and Stromberg w15632 Private Equity and Industry Performance
Moskowitz and Vissing-Jorgensen w8876 The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?
Ljungqvist and Richardson w9454 The cash flow, return and risk characteristics of private equity
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us