Collusion with Public and Private Ownership and Innovation

Boot, Arnoud W. A.; Vladimirov, Vladimir

doi:10.2139/ssrn.3057555

Cited by 5 publications

(4 citation statements)

References 42 publications

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“…For example, Aghion, Van Reenen and Zingales (2013) show that D. Cumming, R. Peter and M. Tarsalewska institutional ownership is associated with more innovation. Boot and Vladimirov (2018) show that ownership and innovation can even exhibit a U-shaped relationship when we take into account market collusion. This occurs when public ownership nurtures innovation, and where the probability of success is either very low or very high.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 94%

Public-to-Private Buyouts and Innovation

2018

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 94%

Public-to-Private Buyouts and Innovation

2018

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“…Raising financing through equity markets may also cause firms to reduce their investment due to other frictions. For example, Ferreira, Manso & Silva (2014) and Boot & Vladimirov (2019) theoretically predict that private firms will innovate more than public firms, due to agency and informational frictions causing external shareholders to be less tolerant of failure than insiders. This finding is consistent with the empirical evidence by Bernstein (2015) that innovation (as measured by patents) declines when private firms go public.…”

Section: Equity Markets and Investmentmentioning

confidence: 99%

Financing Biomedical Innovation

Thakor

2022

Annu. Rev. Financ. Econ.

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We review the recent literature on financing biomedical innovation, with a specific focus on the drug development process and how it may be enhanced to improve outcomes. We begin by laying out stylized facts about the structure of the drug development process and its associated costs and risks, and we present evidence that the rate of discovery for life-saving treatments has declined over time while costs have increased. We make the argument that these structural features require drug development (i.e., biopharmaceutical) firms to rely on external financing and at the same time amplify market frictions that may hinder the ability of these firms to obtain financing, especially for treatments that may have large societal value relative to the benefits going to the firms and their investors. We then provide an overview of the evidence for various types of market frictions to which these drug development firms are exposed and discuss how these frictions affect their incentive to invest in the development of new drugs, leading to underinvestment in valuable treatments. In light of this evidence, numerous studies have proposed ways to overcome this funding gap, including the use of financial innovation. We discuss the potential of these approaches to improve outcomes.

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“…Ferreira, Manso, and Silva [2014] predict that it is optimal for private firms to explore more innovative ideas and public firms to invest in existing ideas, because of agency and informational frictions. Boot and Vladimirov [2018] predict that private firms will pursue more early-stage innovation, whereas public firms will coordinate on existing technologies, because of informational frictions. 30 Pagano, Panetta, and Zingales [1998] note that "in estimating the ex post consequences of IPOs, we face a potential endogenous selection problem: the companies that went public have chosen to do so.…”

Section: Empirical Strategymentioning

confidence: 99%

Do Mandatory Disclosure Requirements for Private Firms Increase the Propensity of Going Public?

Aghamolla

Thakor²

2021

J of Accounting Research

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This paper investigates the effect of mandatory disclosure requirements for private firms on their decision to go public. Using detailed project‐level data for biopharmaceutical firms, we explore the effects of a legal reform that exogenously required firms to publicly disclose information regarding clinical trials. Exploiting cross‐sectional heterogeneity in firms' exposure to the regulation based on their internal development portfolios, we find that affected firms are significantly more likely to transition to public equity markets following the reform. Moreover, firms that go public because of the increased disclosure requirements subsequently reduce the size of their project portfolios while shifting to safer investments acquired externally. We provide additional evidence for the main hypothesis using a second setting: a 2006 German reform which enhanced the enforcement of mandatory disclosure requirements for private firms. The results suggest that private firms' general information environment and disclosure requirements influence the propensity of going public.

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Collusion with Public and Private Ownership and Innovation

Cited by 5 publications

References 42 publications

Public-to-Private Buyouts and Innovation

Public-to-Private Buyouts and Innovation

Financing Biomedical Innovation

Do Mandatory Disclosure Requirements for Private Firms Increase the Propensity of Going Public?

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