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==LBO=====Compustat======non-Compustat===Activity and performance:*FCF/TR “Free cash flows” This project supported [[Leveraged Buyout Innovation (1) divided by turnover*TRGR Turnover growth*Tax/TR Income tax divided by turnover*ROIC Return On Invested Capital = (operating income before taxes + interest expenses) divided by “economic assets” (WCR + fixed Assets (net))*ROE Return On Equity = Net income divided by (stockholders equity - net incomeAcademic Paper)]]
Business Risk:*CVTRGR Coefficient of variation of turnover growth computed on the 3 yearperiod preceding the deal*CVROIC Coefficient of variation of ROIC computed on the 3 year-period preceding the deal*CVROE Coefficient of variation of ROE computed on the 3 year-period preceding the deal*CVFCF/TR Coefficient of variation of FCF/turnover computed on the 3 yearperiod preceding the deal=Variable List=
Composition and characteristics of assets and financial structureComplete list:*TanA/TA Tangible assets (net) divided by total assets (net)*LEV Total debt divided by stockholders equity*RET/TA Retained earnings/Total assets*NC/TA Net cash/Total assets*WCR/TR Working Capital Requirement divided by turnover*FA/TA Financial assets (net)/Total Assets (net)*TA/TAg Total Assets (net)/Total assets (gross)
Variableshttps://docs.google.com/a/rice.edu/spreadsheets/d/1OwcNDYXo_TefwPjUFHo5xVaBpOH4tmTnZmyBsuQRb_s/edit?usp=sharing
*Target-firm size (SIZE)
*Target-firm liquidity (LIQUIDITY)
*Asset sales subsequent to the lbo (ASSETSALE)
*Target-firm return on assets (ROA)
*Target-firm growth opportunities (GROWTH and MRKTBOOK)
*target-firm earnings variability (EARNINGVAR)
*free cash flow ratio (FREECASH)
*acquisition premium paid (PREMIUM)
*trend variable (TIMEDUM)
Dependent variablesAbridged list:
*PBANKL the percentage of the total buyout financing package that is represented by senior bank debt*PDEBTSECLBO factors/incidence: the percentage of the total package that consists of issues of junior debt securities*PPREFER: the percentage of the total package represented by issues of preferred stockLog assets*PCOMMON: the percentage of the total that consists of common equity provided by the buyout groupR&D*PCASH: the percentage of the total that comes from the use of the target firm's existing cash and marketable securities balancesOperating income*CF = INC-TAX-INTEXP-PFDDIV-COMDIVSales*CF/EQUITYTax*Lagged SALESGRLiquidity*TAX/EQUITYROA*FOOTSTEPS (=1 if competing bid or takeover speculation in WSJ)ROIC*percentage non-executive directorsGrowth*percentage independent directorsBook val per share*duality of CEO and chairman*percentage of shares held by CEO*percentage of shares held by non-CEO executive directors*percentage of shares held by institutions *free cash flow (operating cash flow minus interest, tax, dividends, deflated by sales) (cf. Kieschnick (1998) and Halpern et al. (1999)Earnings variability*Takeover speculation of takeover in financial press*Q ratio *Operating income/assetscompeting bid
==Innovation==LBO characteristics===Compustat===*Division or full firm?===Non-Compustat===*acquisition premium*breakdown of financing package:*common equity*preferred equity*senior debt*junior debt*cash
no edit summary
{{Project|Has project output=Variable ListContent|Has sponsor=McNair Center|Has title=Creating a Guide to Patent Litigation|Has owner=Marcela Interiano,Brian Ayash|Has project status=Complete}}
*Tobin's Q
*Machinery industry dummy*R&D/sales*Selling expenses/sales*LogIndustry dummies (assetsprobably 2 digit NAICS)*Diversification index*High cash flow, low Q*Low cash flow, high q*Diversified, low q *number of LBO's *total debt to total capital (book value)*total debt to initial deal value*interest expense to operating income*inside equity ownership fraction
=LBO Effects on Innovation Papers=
Final sample consists of 6398 patents from 472 firms granted from 1984 through may 2007.
Buyouts of corporate divisions are most common, followed by private-to-private deals (investments in independent unquoted entities), secondary deals (firms that were already owned by another private equity investor), then public-to-private deals
Robustness Checks:
*Concern one: Private equity investments for which there was already an existing investor, patents may be double-counted. Employs these patents only the first time they appear then drops them. Results are little changed
*Concern two: Only measures citation count during the 3 years after the award. Using a longer window increases accuracy but decreases sample size. Repeats the analysis through the end of the second calendar year after the patent grant and after the fourth year and finds that results are quantitatively similar.
*Concert three: In divisional buyouts corporate parents may retain best patents and only give low quality patents to the PE backed division. This may lead to an apparent increase in quality in the patents applied for after the award. Addresses this issue by using the longer window for patents above and by rerunning cross tabulations and regressions with divisional buyouts excluded from the sample. Key results are little changed by this shift.
Variables:
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