Does Going Public Affect Innovation?

Entrepreneurial Exits and Innovation

“…In the case of forward citations post-IPO, the negative effect of the quality of inventors entering the firm overwhelms the positive productivity effect experienced by the scientist-inventors at the firm. While the net result of the inventor analysis is consistent with Bernstein (2012), that study finds that inventors entering the firm produce higher quality innovations, while the quality of those staying declines. The difference may be partially due to the crossindustry setting used in that analysis.…”

“…There have, however, been a few efforts to order innovation outcomes by ownership structure on a pairwise basis (publicly-held versus privately-held and acquisition versus privately-held) while taking into account possible selection effects. For example, research contemporaneous with our study suggests that firms pursuing an IPO realize a decline in the quality of their innovations, largely due to skilled inventor departures and post-IPO productivity decreases (Bernstein, 2012). However, the same study finds that more entrenched managers experience a smaller decline in innovation productivity.…”

The bright side of financial derivatives: Options trading and firm innovation

“…Empirical studies have examined, for instance, the effect of institutional ownership on innovation (Aghion, Van Reenen, and Zingales, 2013), analyst coverage (He and Tian, 2013), credit supply (Amore, Schneider, andŽaldokas, 2013), stock liquidity (Fang, Tian, and Tice, 2014), leveraged buyouts (Lerner, Sorensen, and Strömberg, 2011), investors' failure tolerance (Tian and Wang, 2014), the decision to go public (Bernstein, 2015) and the development stage of financial markets (Hsu, Tian, and Xu, 2014). There is very little on the role played by options (or more general financial derivatives) in the R&D process of publicly traded firms.…”

The Life Cycle of Corporate Venture Capital

“…Indeed, inventors, usually highly educated scientists and engineers, are key in absorbing, processing, and using information to produce innovation. Recent studies also find that firms actively reallocate innovative human resources to spur innovation and adjust the scope of innovation (Lacetera, Cockburn, and Henderson, 55 2004;Bernstein, 2015;Brav, Jiang, Ma, and Tian, 2016). In this section, I explore the role of inventors in facilitating knowledge gathering and use.…”