Going Private

Tolga Demir, Ali Mohammadi

Research output: Working paperResearch

Abstract

In this paper, we investigate how going private affects corporate innovation activities. We compare the innovation activities of firms that went private to the innovation activities of firms that received a going-private offer but stayed as public for reasons unrelated to innovation. Using patent-based metrics, we find that the scale of innovation grows after going private. The most important innovations after going private have higher quality relative to the most important innovations before going private. Firms that go private also produce more influential patents in the following years after going private. In line with the predictions of agency theories, our results suggest that going private has a significant positive impact on the innovation performance of listed firms. We also find that, in public-to-private transactions, being acquired by a private equity (PE) firm does not bring an additional performance boost in terms of innovation in comparison to being acquired by a non-PE firm.
Original languageEnglish
PublisherSSRN: Social Science Research Network
Number of pages47
DOIs
Publication statusPublished - 30 Sep 2019
SeriesSwedish House of Finance Research Paper Series
Number19-13

Keywords

  • Innovation
  • Going private
  • Public vs private
  • LBO

Cite this

Demir, T., & Mohammadi, A. (2019). Going Private. SSRN: Social Science Research Network. Swedish House of Finance Research Paper Series, No. 19-13 https://doi.org/10.2139/ssrn.3479980
Demir, Tolga ; Mohammadi, Ali. / Going Private. SSRN: Social Science Research Network, 2019. (Swedish House of Finance Research Paper Series; No. 19-13).
@techreport{ba135bf04ccc43dd9576ed9b70dd83b7,
title = "Going Private",
abstract = "In this paper, we investigate how going private affects corporate innovation activities. We compare the innovation activities of firms that went private to the innovation activities of firms that received a going-private offer but stayed as public for reasons unrelated to innovation. Using patent-based metrics, we find that the scale of innovation grows after going private. The most important innovations after going private have higher quality relative to the most important innovations before going private. Firms that go private also produce more influential patents in the following years after going private. In line with the predictions of agency theories, our results suggest that going private has a significant positive impact on the innovation performance of listed firms. We also find that, in public-to-private transactions, being acquired by a private equity (PE) firm does not bring an additional performance boost in terms of innovation in comparison to being acquired by a non-PE firm.",
keywords = "Innovation, Going private, Public vs private, LBO, Innovation, Going private, Public vs private, LBO",
author = "Tolga Demir and Ali Mohammadi",
year = "2019",
month = "9",
day = "30",
doi = "10.2139/ssrn.3479980",
language = "English",
series = "Swedish House of Finance Research Paper Series",
publisher = "SSRN: Social Science Research Network",
number = "19-13",
type = "WorkingPaper",
institution = "SSRN: Social Science Research Network",

}

Demir, T & Mohammadi, A 2019 'Going Private' SSRN: Social Science Research Network. https://doi.org/10.2139/ssrn.3479980

Going Private. / Demir, Tolga; Mohammadi, Ali.

SSRN: Social Science Research Network, 2019.

Research output: Working paperResearch

TY - UNPB

T1 - Going Private

AU - Demir, Tolga

AU - Mohammadi, Ali

PY - 2019/9/30

Y1 - 2019/9/30

N2 - In this paper, we investigate how going private affects corporate innovation activities. We compare the innovation activities of firms that went private to the innovation activities of firms that received a going-private offer but stayed as public for reasons unrelated to innovation. Using patent-based metrics, we find that the scale of innovation grows after going private. The most important innovations after going private have higher quality relative to the most important innovations before going private. Firms that go private also produce more influential patents in the following years after going private. In line with the predictions of agency theories, our results suggest that going private has a significant positive impact on the innovation performance of listed firms. We also find that, in public-to-private transactions, being acquired by a private equity (PE) firm does not bring an additional performance boost in terms of innovation in comparison to being acquired by a non-PE firm.

AB - In this paper, we investigate how going private affects corporate innovation activities. We compare the innovation activities of firms that went private to the innovation activities of firms that received a going-private offer but stayed as public for reasons unrelated to innovation. Using patent-based metrics, we find that the scale of innovation grows after going private. The most important innovations after going private have higher quality relative to the most important innovations before going private. Firms that go private also produce more influential patents in the following years after going private. In line with the predictions of agency theories, our results suggest that going private has a significant positive impact on the innovation performance of listed firms. We also find that, in public-to-private transactions, being acquired by a private equity (PE) firm does not bring an additional performance boost in terms of innovation in comparison to being acquired by a non-PE firm.

KW - Innovation

KW - Going private

KW - Public vs private

KW - LBO

KW - Innovation

KW - Going private

KW - Public vs private

KW - LBO

U2 - 10.2139/ssrn.3479980

DO - 10.2139/ssrn.3479980

M3 - Working paper

T3 - Swedish House of Finance Research Paper Series

BT - Going Private

PB - SSRN: Social Science Research Network

ER -

Demir T, Mohammadi A. Going Private. SSRN: Social Science Research Network. 2019 Sep 30. https://doi.org/10.2139/ssrn.3479980