Does Going Public Affect Innovation?
Shai B. Bernstein
Journal of Finance,
No. 4,
2015
Abstract
This paper investigates the effects of going public on innovation by comparing the innovation activity of firms that go public with firms that withdraw their initial public offering (IPO) filing and remain private. NASDAQ fluctuations during the book-building phase are used as an instrument for IPO completion. Using patent-based metrics, I find that the quality of internal innovation declines following the IPO, and firms experience both an exodus of skilled inventors and a decline in the productivity of the remaining inventors. However, public firms attract new human capital and acquire external innovation. The analysis reveals that going public changes firms' strategies in pursuing innovation.
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The Operational Consequences of Private Equity Buyouts: Evidence From the Restaurant Industry
Shai B. Bernstein, Albert Sheen
Review of Financial Studies,
No. 9,
2016
Abstract
How do private equity firms affect their portfolio companies? We document operational changes in restaurant chain buyouts using comprehensive health inspection records. Store-level operational practices improve after private equity buyout, as restaurants become cleaner, safer, and better maintained. Supporting a causal interpretation, this effect is stronger in chain-owned stores than in franchised locations—“twin” restaurants over which private equity owners have limited control. These changes are particularly apparent when private equity partners have prior industry experience. The results suggest that by bringing in industry expertise, private equity firms improve firm operations.
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Private Equity and Financial Fragility During the Crisis
Shai B. Bernstein, Josh Lerner, Filippo Mezzanotti
Review of Financial Studies,
No. 4,
2019
Abstract
Does private equity (PE) contribute to financial fragility during economic crises? The proliferation of poorly structured transactions during booms may increase the vulnerability of the economy to downturns. During the 2008 crisis, PE-backed companies decreased investments less than did their peers and experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects are especially strong among financially constrained companies and those whose PE investors had more resources at the crisis onset. In a survey, PE firms report being active investors during the crisis and spending more time working with their portfolio companies.
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11.07.2023 • 19/2023
Stresstest für Sachsen-Anhalts Mittelstand
Die mittelständische Wirtschaft in Sachsen-Anhalt spürt die Folgen von Inflation, Konjunkturabschwung und Kostendruck. Die Stimmungslage der Unternehmen war im ersten Halbjahr 2023 deutlich schlechter als vor einem Jahr. Das geht aus der gemeinsamen Umfrage von Creditreform und Leibniz-Institut für Wirtschaftsforschung Halle (IWH) hervor, an der sich rund 460 Unternehmen aus Sachsen-Anhalt beteiligten.
Axel Lindner
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12.07.2022 • 17/2022
Sachsen-Anhalts Mittelstand zwischen guter Auftragslage und Zukunftssorgen
Die kleinen und mittleren Unternehmen in Sachsen-Anhalt verzeichneten im 1. Halbjahr 2022 noch einmal eine gute Geschäftslage. Die von der Corona-Welle im Winter 2021/22 unterbrochene Konjunkturerholung hat sich somit zunächst fortgesetzt. Das geht aus der gemeinsamen Umfrage von Creditreform und Leibniz-Institut für Wirtschaftsforschung Halle (IWH) hervor, an der sich rund 460 Unternehmen aus Sachsen-Anhalt beteiligt haben.
Axel Lindner
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Measuring Entrepreneurial Businesses: Current Knowledge and Challenges
John Haltiwanger, Erik Hurst, Javier Miranda, Antoinette Schoar
NBER Studies in Income and Wealth,
2017
Abstract
Start-ups and other entrepreneurial ventures make a significant contribution to the US economy, particularly in the tech sector, where they comprise some of the largest and most influential companies. Yet for every startup that becomes a high-profile, high-growth company like Apple, Facebook, Microsoft, and Google, many more fail. This enormous heterogeneity poses conceptual and measurement challenges for economists concerned with understanding how new businesses affect economic growth.
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Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures, and Bankruptcies
Daniel Fackler, Steffen Müller, Jens Stegmaier
Abstract
To assess to what extent collective job displacements can be regarded as unanticipated exogenous shocks for affected employees, we analyze plant-level employment patterns before bankruptcy, plant closure without bankruptcy, and mass layoff. Utilizing administrative data covering all West German private sector plants, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcy. Our analysis of worker flows underlines that bankruptcies seem to struggle for survival while closures follow a shrinking strategy. We conclude that the scope of worker anticipation of upcoming job loss is smallest for mass layoffs and largest for closures without bankruptcy.
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Explaining Wage Losses after Job Displacement: Employer Size and Lost Firm Rents
Daniel Fackler, Steffen Müller, Jens Stegmaier
Abstract
Why does job displacement, e.g., following import competition, technological change, or economic downturns, result in permanent wage losses? The job displacement literature is silent on whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We therefore estimate losses in wages and firm wage premiums. Premiums are measured as firm effects from a two-way fixed-effects approach, as described in Abowd, Kramarz, and Margolis (1999). Using German administrative data, we find that wage losses are, on average, fully explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses in wages and premiums are minor for workers displaced from small plants and strongly increase with pre-displacement firm size, which provides an explanation for the large and persistent wage losses that have been found in previous studies mostly focusing on displacement from large employers.
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16.08.2023 • 21/2023
Gutachten zu Kohlemilliarden: Transparenz der Mittelvergabe erhöhen
Mit rund 41 Milliarden Euro will der Bund den Regionen helfen, die vom Kohleausstieg betroffen sind. Wird das Geld sinnvoll genutzt? Eine Analyse der Wirtschaftsforschungsinstitute IWH und RWI gibt erstmals einen Überblick über das Programm und benennt Verbesserungspotenziale.
Oliver Holtemöller
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Cultural Norms and Corporate Fraud: Evidence from the Volkswagen Scandal
Iftekhar Hasan, Felix Noth, Lena Tonzer
Abstract
We investigate whether cultural norms shaped by religion drive consumer decisions after a corporate scandal. We exploit the notice of violation by the US Environmental Protection Agency in September 2015 accusing Volkswagen (VW) of using software to manipulate car emission values during test phases. We show that new registrations of VW cars decline significantly in German counties with a high share of Protestants following the VW scandal. Our findings document that the enforcement culture in Protestantism facilitates penalising corporate fraud. We corroborate this channel with a survey documenting that Protestants respond significantly different to fraud but not to environmental issues.
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