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Innovation and R&D investments by leveraged buyout companies in times of crisis

Author

Listed:
  • Fabio Bertoni

    (EM - EMLyon Business School)

  • Anne-Laure Le Nadant

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Frédéric Perdreau

    (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne)

Abstract

We study innovation and R&D investments made from 2008 to 2010 by UK companies that were the targets of leveraged buyout (LBO) in previous years. We find that overall, LBO companies do not exhibit lower innovation and R&D investments than non-LBO companies during the crisis, with other things being equal. However, innovation and R&D investments decline substantially in LBO companies that were financially constrained before the deal. We argue that in unfavorable market conditions, LBOs tend to exacerbate the issues related to investments in innovation in firms facing financial constraints.

Suggested Citation

  • Fabio Bertoni & Anne-Laure Le Nadant & Frédéric Perdreau, 2014. "Innovation and R&D investments by leveraged buyout companies in times of crisis," Post-Print halshs-01006395, HAL.
    • Handle: RePEc:hal:journl:halshs-01006395
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    References listed on IDEAS

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    Cited by:

    1. Hoa Trong Hoang & Dung The Pham & Duc Dinh Nguyen, 2018. "Innovation practices at Vietnamese manufacturers: the impacts of innovation on profitability and growth," Economics Bulletin, AccessEcon, vol. 38(3), pages 1457-1466.

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    More about this item

    Keywords

    Leveraged Buyouts; innovation; research and development; economic crisis; private equity; financial constraints;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • G3 - Financial Economics - - Corporate Finance and Governance

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