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LBOs and innovation: the French case

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  • Anne-Laure Le Nadant

    () (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Frédéric Perdreau

    () (COACTIS - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet [Saint-Étienne])

Abstract

A long-standing controversy is whether LBOs generate economic efficiencies through a superior governance framework, or whether LBO funds are driven by short-term profit motives and sacrifice long-term growth to boost short-term performance. Using a propensity score methodology, this paper provides an empirical analysis of the innovative efforts of a sample of 89 French manufacturing firms that underwent a buyout between 2001 and 2005. The matching estimates (average treatment on the treated, ATT) of the effect of LBOs on firm level of innovation expenditures in 2006 show no significant differences between LBO targets and comparable companies that did not go through an LBO. In contrast, we find significant effects of LBOs on both service innovation and marketing innovations in design and packaging and product promotion.

Suggested Citation

  • Anne-Laure Le Nadant & Frédéric Perdreau, 2011. "LBOs and innovation: the French case," Post-Print halshs-00669910, HAL.
  • Handle: RePEc:hal:journl:halshs-00669910
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00669910
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    Keywords

    Private Equity Firms; Buyouts; Innovation; Private Equity Firms.;

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