TY  - JOUR
AU  - Lerner,Josh
AU  - Sørensen,Morten
AU  - Strömberg,Per
TI  - Private Equity and Long-Run Investment: The Case of Innovation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14623
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14623
L1  - http://www.nber.org/papers/w14623.pdf
N1  - Author contact info:
Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu

Morten Sorensen
Columbia University
Columbia Business School
Uris Hall 802
3022 Broadway
New York, NY  10027
Tel: 212/851-2446
E-Mail: ms3814@columbia.edu

Per Stromberg
Institute for Financial Research (SIFR)
Drottninggatan 89
SE-113 60 Stockholm
Sweden
Tel: +46 8 728-5128
Fax: +46 8 728 5130
E-Mail: per.stromberg@sifr.org
AB  - 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.
ER  -