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Top Research Papers Examining Trends in Private Capital Markets from 2021

The American Investment Council released its top research papers published in 2021 examining important trends in private capital markets. The report surveys research in key areas including: how private equity contributed to improving financial stability after the 2008 financial crisis, the benefits of allowing retail investors to access private equity returns, the resiliency of private equity-backed businesses during economic downturns, among others.

“Independent research from respected academic institutions, government economists, and market analysts continues to demonstrate the value of private equity in the American economy ,” said AIC Vice President of Research Jamal Hagler . “The evidence is clear that private equity played a key role supporting our financial system after the 2008 crisis, providing public pension recipients with outsized returns, and adding value to businesses of all shapes and sizes across the country.”

The American Investment Council plays a critical role compiling and publishing data and reports that show how private equity has a positive impact on the American economy. Read the list of top 2021 research papers below:

Private equity was a source of financial stability after the 2008 Financial Crisis

1.)  private equity and financial stability: evidence from failed bank resolution in the crisis.

• Emily Johnston-Ron, Federal Deposit Insurance Corporation
• Song Ma, Yale University
• Manju Puri, Duke University, National Bureau of Economic Research (NBER), and Federal Deposit Insurance Corporation (FDIC)

This paper examines how private equity investment in failed banks during the 2008 financial crisis helped to stabilize the financial system in the long term. Using data from the FDIC, Preqin, the Small Business Administration, the Internal Revenue Service and the Census Bureau, the authors found that private equity investors were a partner of last resort by acquiring failed banks that were underperforming and riskier than those acquired by other banks. Additionally, the authors found that private equity investors acquired failed banks when neighboring banks were also in distress and unlikely to acquire a nearby failed bank.

These findings imply that private equity investors can fill capital gaps when other types of acquirers are constrained. These private equity investments helped boost local income and employment, by increasing lending activities to small businesses. Finally, the study finds that private equity acquisitions of failed banks saved the FDIC billions in insured deposits. This paper highlights the stabilizing force private equity provides in times of financial crisis.

Allowing retail investors to access private equity’s outsized returns

2.) how might investing in private equity funds affect retirement savings accounts.

• Damir Cosic, Urban Institute
• Karen Smith, Urban Institute
• Donald Marron, Urban Institute
• Richard Johnson, Urban Institute

This study from four researchers at the Urban Institute examines the effect of allowing retail investors to access private equity investments in their retirement savings accounts. In 2020, the United States Department of Labor released an information letter that private equity components may be offered as part of a retirement asset allocation fund if it is consistent with requirements of the Employee Retirement Income Security Act.

The authors constructed a capital asset pricing model, using estimates for private equity alphas and betas taken from the latest academic literature on private equity performance. Using the Urban Institute’s Dynamic Simulation of Income Model, or DYNAISM, the authors simulated defined contribution retirement accounts which allow investors to invest in private equity and then compared them to the baseline scenario that does not include private equity. The authors found that adding limited private equity to retirement savings funds would most likely increase the rate of return on retirement savings and increase average retirement account balances. These results likely occurred because of potentially higher returns for private equity and the diversification that private equity adds to a portfolio.

The growth of private debt as an asset class

3.) direct lending: evidence from european and u.s. markets.

• Laura Fritsch, University of Oxford – Saïd Business School
• Wayne Lim, University of Oxford – Saïd Business School
• Alexander Montag, University of Oxford – Saïd Business School, Institute of Industrial Economics
• Martin Schmalz, University of Oxford – Saïd Business School, CEPR, CESifo, and European Corporate Governance Institute

This study from four scholars at the University of Oxford examines the growth of private debt as an asset class, particularly direct lending, and investigates why assets under management have tripled in the last decade. The authors find three direct causes for the growth of direct lending:

• First, a decrease in bank lending caused by bank consolidation and new regulation.
• Second, an increase in borrower demand driven by sponsor backed deals.
• Finally, investors searching for yield in a low interest rate environment.

These three factors are the main drivers in the growth of assets allocated to the asset class, which is averaging an annual growth rate of over 14 percent. The authors find that the choice between bank loans and direct loans is not a binary. 48 percent of firms examined used both private debt and bank debt, suggesting that banks and private debt providers provide complimentary roles. Using data from Preqin, the authors find that funds from 2008 to 2016 had median net internal rates of returns ranging from 9.2 to 10.8 percent depending on strategy. The authors conclude noting that as the industry continues to develop manager selection will be an important determinant of returns as competition for quality deals will only increase.

4.) Private Debt Fund Returns and General Partner Skills

• Pascal Böni, Tilburg School of Economics and Management
• Sophie Manigart, Ghent University – Vlerick Business School

This paper examines whether manager skill is an important driver in the performance of private debt funds. To study manager skill, the authors use Preqin data covering 448 funds from 1996 to 2018 with the most common strategies being direct lending, mezzanine, and distressed debt. The mean IRR is 9.2 percent with a wide interquartile range. They find that the average private debt fund outperforms investment grade and high yield bond market benchmarks, as well as the S&P 500 total market index. The authors then examine to what extent outperformance can be attributed to general partner skill.

Using regression analysis, the authors test the persistence of performance over successive funds and find that fund managers with more experience are better able to anticipate changes in credit market conditions. The authors do note that unpredictable conditions, like recessions, have a greater affect than general partner skill. This paper provides one of the first in-depth analysis of private debt as an asset class, while also attempting to determine the role of manager selection in outcomes.

Private equity investments continue to outperform

5.) eye on the market – food fight: an update on private equity performance vs. public equity markets.

• Michael Cembalest, P. Morgan Asset Management

J.P Morgan Asset Management’s biennial analysis of private equity finds that private equity still outperforms public markets, though that outperformance is declining. The declining outperformance can be attributed to non-stop stimulus that has propped up public markets in a decade long bull run and because private equity deals have become more expensive as acquisition multiples have risen.

The analysis shows the average buyout fund manager has consistently beaten public markets. Additionally, underperformance among managers in the bottom quartile is relatively modest when compared to previous decades. The authors also found that operating improvements are an important driver in buyout performance. The study also examines the performance of venture capital (VC), and finds that this asset class consistently outperforms when looking at the average fund.

6.) Private Investments in Diversified Portfolios

• Gregory Brown, University of North Carolina, Chapel Hill – Kenan-Flagler Business School
• Wendy Hu, Burgiss
• Bert-Klemens Kuhns, University of North Carolina, Chapel Hill – Kenan-Flagler Business School

This paper examines how the addition of private funds in a diversified portfolio will affect the overall performance of the portfolio. Using fund data provided by Burgiss and the Private Equity Research Consortium on 3,380 U.S. buyout, venture, and real estate funds, the authors examine the effects of private market assets on fund performance and diversification. The authors simulate the performance of a portfolio with 40 percent public equity, 40 percent fixed income, and 20 percent private funds and compare it to a traditional portfolio with 60 percent public equity and 40 percent fixed income. In almost all cases, portfolios benefit from allocating to private market assets. The portfolio with a combination of private asset exposure has a return (volatility) of 7.80 percent (9.80 percent) while the traditional allocation results in a return (volatility) of 6.58 percent (10.17 percent). The study highlights how private funds have generated greater risk-adjusted returns when compared to portfolios that lack exposure to alternative assets.

Private equity-backed companies can withstand higher leverage

7.) does private equity over-lever portfolio companies.

• Sharjil Haque, University of North Carolina, Chapel Hill

This paper examines whether private equity firms expose their portfolio companies to too much leverage, increasing the likelihood of bankruptcy. The author posits that firms targeted for a leveraged buyout are better situated to carry higher debt levels and that their optimal debt-level is significantly higher than other firms. Using data from 2000 to 2020 covering 2,800 leveraged buyouts, the author creates a dynamic trade-off model to estimate the optimal amount of leverage for a portfolio company. The author finds that private equity-owned firms are able to sustain higher levels of debt – 49.8 percent compared to 23.3 percent among matched public companies. This is due to general partners’ ability to achieve higher return on capital and return on assets, while also lowering the portfolio company’s credit spread.

The paper also demonstrates that general partners are more willing to inject fresh capital into a company in the event of financial distress, leading the firm to be less of a credit risk in the eyes of its lenders. Compared to similarly matched public firms, private equity-owned firms are 4 percent more likely to receive equity injections, leading to a reduced cost of distress. These findings provide an early model to best capture how much leverage is optimal in a buyout and suggests that limiting leverage could destroy firm value.

8.) Capital Structure and Leverage in Private Equity Buyouts

• Robert Harris, University of Virginia – Darden Graduate School of Business
• Shawn Munday, University of North Carolina, Chapel Hill – Kenan-Flagler Business School

This article in the Journal of Applied Corporate Finance examines the capital structure of buyouts and how it relates to investment performance. The study provides an overview on how leverage is introduced in private equity transactions, ranging from the portfolio company to fund, and explains the rationale behind capital structure decisions. The paper reviews previous academic literature on capital structure as it applies to private equity, citing various studies that show how PE-backed firms are better positioned than other companies to handle higher debt loads. These reasons include but are not limited to: sponsor relationship with lenders, closely held control, and capital available for equity injections.

After a review of the literature, the article offers an empirical analysis of leverage’s relationship to performance using deal-level data on 6,248 buyouts from 1984 to 2020 provided by the StepStone Group. The analysis found that when debt is measured as a percentage of deal value, there is a positive relationship with expected returns. When debt is measured as a multiple of EBITDA, there is only a weak relationship to performance. These results suggest that firms with high debt to value ratios are “value investments” while firms with high leverage ratios tend to be growth companies. Additionally, the authors identify that debt-to enterprise value has remained stable and below its historic average since the Great Financial Crisis. This trend contrasts with the narrative that leveraged buyouts place too much debt on portfolio companies. This report chronicles how private equity has employed unique capital structures to add value to portfolio companies.

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Mapping research in the field of private equity: a bibliometric analysis

• Published: 02 August 2021
• Volume 73 , pages 61–89, ( 2023 )

Cite this article

• Sakshi Sharma 1 ,
• Kunjana Malik   ORCID: orcid.org/0000-0001-8983-9803 2 ,
• Manmeet Kaur 3 &
• Neha Saini 4  

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A Correction to this article was published on 09 August 2021

This article has been updated

Owing to the sheer volume of research that has been done in the field of private equity (PE) in the last decade it may be pertinent to mention that PE studies became the focal point of much corporate finance and socio-economic studies. PE capital is a preferred source of investment where high net worth individuals and firms purchase a stake in private companies to gain a significant influence over a company's operations and earn returns before exiting the firm. The paper consolidates and synthesizes existing findings which shoot from the studies of PE and PE performance, develop thematic maps, clusters and propose some novel future research opportunities in this globally pervasive area. The themes that are highly researched indicate that there is a negligible shift in research in PE towards a more multidisciplinary front. The boundaries are still limited to finance, entrepreneurship, and governance studies. While the existence of performance studies in these researches hold a potential significance, the authors cannot undermine the substantial interest of researchers to investigate the impact of PE on performance, cashflows, liquidity, and leveraged buyout as the preferred source of financing to PE firms. Emerging topics include the effect of corporate governance (including triple bottom approach), environmental and social sustainability on the performance of PE firms, sectoral analysis of PE in various sectors like real estate, banking, information technology. Areas related to the valuation of PE firms via management buyouts and free cash flow still deserve greater attention. Emerging themes like effect of private equity on employment level, private equity exits and sustainable private equity have been suggested. The study would help academic researchers and policymakers to know the intricacies of PE and identify relevant areas which need investigation.

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adapted from Aria and Cuccurullo (2017) and Firdaus et al. (2019)

Source: Authors’ elaboration using Biblioshiny

Source: Authors’ elaboration based on current analysis

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Sharma, S., Malik, K., Kaur, M. et al. Mapping research in the field of private equity: a bibliometric analysis. Manag Rev Q 73 , 61–89 (2023). https://doi.org/10.1007/s11301-021-00231-y

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Doing Company Research: A Resource Guide

U.s. private companies.

• Introduction
• What They Do & How They Do It
• Subsidiaries, Branches, & Locations
• Financial Information
• Officers & Directors
• Rankings & Lists
• Searching for the News
• Specific Countries & Regions
• Using the Library of Congress

There are many difficulties in researching private companies, defined here as companies that do not trade on stock exchanges. Consequently, researching private companies often requires considerable creativity and patience.

Unlike public companies, private companies are not required to file with the Securities and Exchange Commission (SEC), so the type of information and the depth of information that can be found in those documents is not necessarily going to be available for private companies. There are however, two exceptions that can be used in limited cases. First, if the company you are researching merged with or was acquired by, a public company it is possibly that the public company may provide investors information about the deal via SEC filings. Second, if the company was once public but goes private, previous SEC filings will still be available and may can be helpful for a limited time.

After exhausting some of the more basic directories that are found in the Basic Information section, the sources and strategies suggested below might reveal more information. Keep in mind that for many companies, it is likely going to be hard to find information beyond name and location.

Where to Search & How

• When it comes to researching private companies, the first place to look would be the company's web page if they have one. Never underestimate the information that companies publish on their own web sites. Even if some companies use their web pages as glorified catalogs, brochures, or advertisements how they present that information may still be helpful. Often, for private companies, their web pages may be what provides the most information information. Companies will often organize their website in ways that can provide a sense of how they do business. If the company has an About Us area, that may be where they provide a company overview, history information, etc.
• Try directory sources which may provide details that just aren't found on a company website like competitors, sales/employee figures, etc. While there are some still in print, databases like Mergent Intellect and Data Axle Reference Solutions (previously ReferenceUSA). They are good for information on a company or companies but you are looking at who their competitors might be these databases can allowing someone to tailor their search and their output. Users to limit their search to a specific geography (city, state, metro area, etc), industry, company type, etc. and may even have the ability to choose what data elements they want to download.
• Searching the internet may be helpful and you may find some information, but be wary because anyone can put up anything, and information can be very dated and often just wrong. You may be able to find out about who the company does business with, projects they may be working on, etc. Use the advanced function in web browser like Google that allows you to find out what companies link to the company you are researching.
• The state agency responsible for registering companies in the state will often have an online search that may provide information but it will be limited.  There are a few things to remember. First, most often this function is in the Secretary of State (Corporations Division) but in some cases like New Jersey, it can being the Revenue/Taxation agency.  Third, this information regardless of state, is going to be very limited.how much information is available will vary state to state. Some states provide .pdfs of filings for the past few years, some just basic citation information, others require a fee to even search.
• Another option is searching full-text news databases that include local news sources and trade literature. A smaller private company may not be discussed in bigger, more national newspapers, but these businesses will likely be something their local newspapers cover because they matter to the local economy. Conversely, if a business is in a particular industry that has national trade publications, the industry will be interested in all companies in the industry regardless of size. See our Searching for the News section for sources.

Subscription & Internet Resources

Below are databases and openly accessible sources that are company information - location, contact information, officers. It may be that you will find important information on private companies and their executive in full-text articles. For more general full-text news sources available at the Library of Congress see the Searching for the News tab.

• Companieslogo.com External This is a good quick look-up source for logos.
• Corporate Registration External This is a system maintained by the National Association of Secretaries of State that links to the web sites for the state government agency responsible for registering corporations in their states. The filings, searching, access, and archive will vary from state to state. Since companies are required to file with the Secretary of State of the state in which they are established, these filings may be all there is available.
• Doing Historical Company Research This research guide provides links to selected print and electronic resources, as well as tips and tricks for those trying to find information on older or out of business companies.
• Dun & Bradstreet External This is a good source for some basic company information but they do charge for most of what they have including the products that they sell. Most companies have D&B reports (generally for credit information). Dun & Bradstreet is a publisher that often actively seeks information from private firms by directly calling the company. Much of the information in a D&B report is voluntary so the quantity of information will likely vary from company to company. In 2003 D&B acquired Hoovers which was another known publisher of information on privately owned companies. Data from D&B is available for purchase directly from the company. They also have a number of products that are available via subscription including Relationship Manager and via Mergent Intellect. The Library of Congress does not subscribe to this product but searching for a company and very limited information is free check your university or public library for possible access.
• MacRAE'S Blue Book External MacRae's has published directories since 1893. The online source has over 1,200,000 North American industrial companies with more than 2 million product listings indexed under more than 50,000 product headings.
• OCCRP ID External This is an index of public registries for company, land and court records from from 181 countries.
• Open Corporates External This database includes over 200+ million companies around the world. For US companies data is coming from the official state agencies and often link directly to the state data when possible.
• Subsidiary Tracker External This database can be used for understanding corporate subsidiaries but the search engine was created to track economic development subsidies as well as other forms of government financial assistance to business.
• Thomas Net External This is the online version of the long running Thomas Register of American Manufacturers.
• U.S. Patent & Trademark Office - TESS USPTO has has a systems to search trademark applications and registrations with Trademark Electronic Search System (TESS)

On July 18, 2023 the staff of the Business Section hosted a webinar going over how to do private company research. We went over some of the databases and websites as well as focusing on some strategies that may be particularly helpful.

If you are looking for the text transcript one is available .

• << Previous: Introduction
• Next: U.S. Public Companies >>
• Last Updated: Jul 10, 2024 3:04 PM
• URL: https://guides.loc.gov/company-research

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Company & Industry Research

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Research Tips

Company research can include a lot of different types of Information.  This guide focuses on the best databases the Commerce Research Library has to offer for corporate profiles and corporate family research.

If you're looking for where a company or subsidiary is officially registered check their location in one of the database below and then check the official government website for the relevant state to find official documentation.  Here is an example of the Delaware website , a popular state where many companies register.

Databases can provide incomplete and conflicting information.  Use clues like shared company names, shared executives, and shared websites to determine if two entities are connected even if they do not appear to have a parent/subsidiary relationship.

Best Bets Company Profiles

Public and private company profiles and research on both domestic and international companies. Users can search by company name, industry (keyword and NAICS or SIC codes), geographical region, employee and revenue size, and corporate family tree.

CourtLink A detailed collection of federal and state court dockets and documents, including relevant briefs, pleadings, and motions.

Nexis Diligence Diligence enables you to conduct thorough due diligence on companies and individuals, going beyond credit scores and watch lists to develop a comprehensive due diligence report utilizing global news sources, sanction lists, company information, legal history, and public records.

Nexis Dossier Take advantage of a broad collection of company financials, industry analysis, hard-to-find contact data and more—from a single interface.

Nexis Gain unique insights from over 40,000 sources, including trusted up-to-date and archived news, company profiles, public records, industry information and social media content – all in one place.

Best Bets for Corporate Family Trees

Other Company Research Resources

As part of the EBSCOhost Business Source Premier database, Company Profiles provide MarketLine/Medtrack Reports, which cover company overview, SWOT analyses, key facts, top competitors, company products and services, subsidiaries, etc.

This directory features listings across the government, corporations, and nonprofit organizations. Find individuals holding high-level positions and their support staff or locate departments, agencies, major offices, and smaller bureaus by subject areas or organization.

ProQuest's ABI/INFORM includes full-text journals and key trade publications, dissertations, market reports, industry reports, business cases, global and trade news, local and regional business information, SSRN working papers, and other industry-focused information, as well as the Wall Street Journal back to 1984.

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Company research: family trees 101.

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• DOI: 10.33830/jom.v19i1.4126.2023
• Corpus ID: 259720880

Risk Management in Private Companies and Public Sector Organizations: A Preliminary Comparative Study

• D. Priyarsono , Raden Racmadi Gustrian , +3 authors Y. Munawar
• Published in Jurnal Organisasi dan… 26 June 2023
• Business, Law

Figures and Tables from this paper

2 Citations

Risk navigation in finance: a deep dive into silicon valley bank and credit suisse strategies, asesmen manajemen risiko operasional pada lembaga publik, 34 references, diffusion of corporate risk-management characteristics: perspectives of chief audit executives through a survey approach : diffusion of risk-management characteristics, public and private management: what's the difference, the role of control environment in developing internal control efectiveness and good corporate goverment, managing risk in the public sector – the interaction between vernacular and formal risk management systems, central values of government and business: differences, similarities and conflicts1, enterprise risk management: factors associated with effective implementation, public and private organizations: how different or similar are they, integrated enterprise risk management: from process to best practice, a comparison of private and public sector performance, investigating a role of strategic sourcing and organizaiotnal culture on mitigating risk in supply chain, related papers.

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Are Researchers at Private Companies Allowed to Publish Papers?

I'm an academic researcher with a very good publication track record in computer science.

I'm considering the possibility of applying for a research position at a well known telecommunications company with a large research department. But I still would like to have the possibility of publishing theoretical work.

1) Are researchers in private companies usually allowed to publish theoretical work produced in cooperation with researchers outside the company?

2) Are researchers in private companies usually allowed to publish theoretical work produced inside the company?

• publications

• 2 This is likely off-topic here as it is about a company. But the place to get an answer is from Erickson's HR office. Or you could read the contract if you have one. Just guessing, though, is that you will give up a lot of IP rights to the company, including non-compete and trade secret rules, etc. –  Buffy Commented Aug 26, 2018 at 13:19
• For future reference, see the Help Center to see what questions work well here and which are likely to be closed: academia.stackexchange.com/help . Anyway. Welcome to Academia. –  Buffy Commented Aug 26, 2018 at 13:22
• 3 Actually the issue is the same. There is another site here that is better suited to such questions: workplace.stackexchange.com and possibly others. –  Buffy Commented Aug 26, 2018 at 13:38
• 11 As a researcher in industry, I strongly believe that this question is on topic and appropriate. –  jakebeal Commented Aug 26, 2018 at 16:59
• Do you mean, are they permitted to by the academy or by their employers? –  Azor Ahai -him- Commented Aug 27, 2018 at 1:20

3 Answers 3

Speaking as a researcher at a private for-profit company, who also publishes frequently, it all depends on the nature of the business model and the position.

Most people at companies do not publish, either because the company has no interest in publishing or because their particular job doesn't involve much of scientific interest. For companies that are involved in cutting edge work, however, scientific publishing can gain credibility and visibility for the organization just like it does for people at universities. This is the case for the company I work for, particularly given that many of our projects are federally funded research where the government is paying us in part to disseminate knowledge.

Nor is there any necessary conflict between protecting intellectual property and publishing. The three main strategies for protecting IP are copyright, patent, and trade secret. Of those, only trade secret is incompatible with publishing, and it is generally the most fragile and least used in any case.

The biggest obstacle to publishing in private industry is simply priority and time. Writing a manuscript is a lot of work, and if management doesn't see much benefit, they will likely want you to use those hours for things more directly connected to the bottom line. You might be able to publish out of hours, but that can be a more complex negotiation.

Bottom line: it really depends on the particular circumstances. The best way to know if you will be able to publish is to look at whether others in the group you are joining publish. If so, you probably can. If not, there are likely major obstacles, whether formal or merely pragmatic.

• Unfortunately this answer fails to make an essential point. Most companies take control of the decision to publish for their employees. There is a gate between you and publishing, even for work not done on company time. The fact that the gate will be opened for you in most cases doesn't change the fact of the gate, nor the fact that its default position is closed . You give up your freedom to decide what to publish and yield it to your employer. You can decide whether that is good or bad, but you can't make it not a fact by wishing it weren't true nor by finessing the outcome. –  Buffy Commented Aug 28, 2018 at 10:35
• 2 @Buffy I don't dispute your statement---it's just that in my experience as a private researcher, it is pragmatically rarely relevant. If you are in a publications-friendly position, then the system will be tractable and generally pose much less of an obstacle than peer-review or collaborators. If not, then the formal permissions process is probably much less of a barrier than "Why did you spend 80 hours on this crap when you could have been doing your job?" –  jakebeal Commented Aug 28, 2018 at 11:02

It is not possible to answer your question unless you specify the company name. Many companies are very active in research, and many companies are not. As you are not an employee yet, you cannot ask the HR, but you can search.

For example, if you search for "deep learning" in ACM , and click on institutions on the left menu, you can see there is Microsoft, IBM and Google there. ACM also keeps company profiles, so you know what topic they are interested in, for example this is profile of Google .

Someone (from Amazon) just told me that Amazon had nearly turned FLoC into a private Amazon event. The conferences at FloC are highly theoretical, and among the most prestigious in logic.

But actually, you don't need to ask this question, as in the companies that are active in research, the directors/principal engineers etc are often former professors, and we followers immediately know where big shots move :-)

Update: thanks @Anyon for pointing out that the company name was editted out. Yes, that company does publish, see its profile in ACM.

• 4 Psst. If you check the edit history of the OP you'll find the company name. It was likely edited out so that the question wouldn't depend too much on personal factors. –  Anyon Commented Aug 27, 2018 at 19:10

In general terms, if the publication is, in any way, related to the company's business it will probably be contractually forbidden unless specific permission is given for the paper.

Signing on with a company that depends on IP usually means that anything you produce is theirs, not yours. Read the contract to be sure. Some contracts try to bind you forever, even when you leave the company. The legality of these can be challenged and they may be illegal in some places.

However, if your other work is completely unrelated, then it is probably ok, but it needs to be "released" by whoever is responsible for IP control at the company.

On rare occasions (THE WOZ at HP, for example), a company will give permission to do something that would otherwise be prohibited, but normally because they lack sufficient insight to see the consequences. If they are happy enough to make an exception, make sure you have it in writing - signed and maybe notarized.

• 2 I assume that too, I just meant that some companies allow their employees to publish (some) of their work. –  adjan Commented Aug 26, 2018 at 14:11
• 3 My employer (not Google or IBM) can certainly deny publication if it is inappropriate for the needs of the business, but on the other hand it has a formal procedure in place to approve papers for external publication, conference presentations, etc, and there is a steady stream of papers (of the order of 10 to 100 per year) that are approved for publication. –  alephzero Commented Aug 26, 2018 at 18:49
• 2 Oh - absolutely. But if that is your line, you need to consider all the US government labs as well - they all have processes to allow release of information including publications. Scientists are allowed to publish, they just need to follow the rules. –  Jon Custer Commented Aug 27, 2018 at 13:53
• 2 It isn't national security per se - yes making sure it is not classified is part of it, making sure it isn't patentable is part of it, but formal internal review and quality control is also part of it. And, generally, that has been true at every non-university place I've worked or interacted with. It is a hurdle, yet my groups over the years have managed to publish many many papers (and I've got the auto-generated emails from the review process to prove it!). –  Jon Custer Commented Aug 27, 2018 at 14:33
• 2 @JonCuster To build on what you've said: a nice example of this is NIST . Assured quality in results is a critical part of their mission, so every publication goes through a rather strict internal technical review before submission is allowed. –  jakebeal Commented Aug 27, 2018 at 15:44

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Markups and Markdowns

Interest in market power has recently surged among economists in many fields, well beyond its traditional home in industrial organization. This has focused empirical attention on markups, the ratios of price to marginal cost in product markets, and markdowns, the ratios of inputs’ marginal products to their paid wage in factor markets. In this review, I offer a conceptual overview of both metrics and survey recent research examining them. I pay particular attention to the distinct interests that microeconomists and macroeconomists have had regarding these metrics, as well as topics that have bridged and are bridging these often distinct literatures.

This paper was prepared for Annual Reviews in Economics. I am serving as an expert witness in a legal case involving market power issues. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.

MARC RIS BibTeΧ

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August 28, 2024

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility:

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Researcher discusses two measures that predict effective managers

by Liz Mineo, Harvard Gazette

Good managers are hard to find. Most companies pick managers based on personality traits, age, or experience—and according to a recent National Bureau of Economic Research working paper , they may be doing it wrong.

Co-authored by David Deming, Isabelle and Scott Black Professor of Political Economy at Harvard Kennedy School, the study concludes that companies are better off when they select managers based on two measures highly predictive of leadership skills .

The Gazette talked to Deming about the study's findings. This interview has been edited for length and clarity.

What are the qualities that make a good manager, and why is it so hard to find them?

Being a good manager requires many different qualities that often don't exist in the same person. First is the ability to relate well to others, to create what Amy Edmondson and others have called psychological safety, meaning the ability to make people feel stable and secure in their role so they are comfortable with critical feedback. That's a key component of being a good manager.

Communication skills are also essential. As a manager, you should know that there's not one good way to deliver feedback to your workers because the words you use and the way you frame your statements also matter.

At the same time, you must also be analytically minded and open to different ways of doing things and be able to take a step back and reassess whether your team or organization is working as well as it could be.

Overall, being a good manager requires both interpersonal skills and analytical skills. You also need to have a strategic vision—which is something that our study does not capture. Managers must have a sense of what their organization is trying to accomplish. Any one of those skills is hard to find. Having all three, and knowing when to use them, is even more difficult.

One of the paper's most surprising findings is that people who self-nominate to be managers perform worse than those randomly assigned. Why is that?

In the study, we randomly assign the role of manager. That was half of the experiment. In the other half, we asked people which role they wanted, and we assigned the role of manager to the people with the greatest preferences for being in charge.

We found that people with the greatest preference for being in charge are, on average, worse than randomly assigned managers. It's hard to know exactly why because there are a lot of factors in play, but we show evidence in the paper that they are overconfident in their own capabilities, and they think they understand other people better than they do. We all know people like that.

This was a surprising finding. And it's important, because interest in leadership plays a big role in how companies pick managers. Companies have their own hiring and employee evaluation policies of course—they don't pick managers randomly like we did—but it's surely true that preference for leadership plays a big part in who gets promoted to management.

For example, we find that men are much more likely to prefer being in charge, but they aren't any more effective than women in the role of manager.

The main lesson I take from this finding is that there's a big difference between preferences and skills; just because you want to be a manager doesn't mean you're going to be good at it. Organizations that take more scientific or analytical approaches to identifying good managers are going to come out ahead.

What are the best predictors for selecting a good manager, according to your paper?

It has nothing to do with how a person looks, how they speak, or what their preferences or personality traits are. None of those things are predictive. There are only two things that are: One is IQ as measured by the Raven's Progressive Matrices test, which measures general and fluid intelligence, spatial reasoning, problem-solving , etc.

But the one that's more interesting to me is a measure of what we call economic-decision-making skill, or the ability to allocate resources effectively, that my co-authors and I created in a different paper. We use that very same measure in this experiment, and we found that it is highly predictive of being a good manager.

Why do you think these two tests predict being a good manager, but other traits like age, experience, personality, or gender do not?

If you want to predict who's going to be going to be good at a specific performance task, in this case, managing a team to solve a problem, the best predictors are most closely related to what you're asking someone to do.

What matters is the ability to make decisions about the allocation of resources under time constraints ; how to organize and motivate the members of your team to produce the most output. The lesson for me is that it's a crutch to use personality traits and preferences to predict performance because they're not that closely related to the performance you're interested in.

We see this pattern elsewhere. There's a huge amount of research literature on figuring out who's going to be a good teacher in the classroom, and study after study finds that characteristics such as age, gender, education, SAT scores, college major don't do a very good job of predicting who's going to be a good teacher.

Yet if I put you in the classroom for a little bit of time and I see how much you improve student learning, that is a very good predictor, because it's very closely related to the thing you ask people to do. If you want to know who's going to be a good manager, make them manage. Don't just rely on personality characteristics, or whether they raise their hand to say, "I want to do it."

Why is it important to have good managers?

At the broadest level, it's important to have good management because companies, universities, and other organizations face such an open-ended strategic landscape. They must tackle a variety of issues, such as where they should direct their attention, what are the most important things to focus on, and how to deploy resources toward solving certain problems.

If you look at major corporations , they tend to be conglomerates that have many different divisions that do many different things. Google, just to give one example, in the beginning had a core product: a search engine. But now Google is Alphabet, and it still does search, but it also does venture investing, autonomous driving, drug discovery, and many other things.

If you zoom down to the micro level, a manager who leads a team of three or four employees faces the same sort of problems: What should I focus on? Who's going to do what? How do I give people feedback? What are each person's strengths and weaknesses?

To be an effective manager, you must think about how to assign workers to roles to achieve the greatest success, and you must know how to communicate with a person to help them improve. The skill of being a good manager is probably underappreciated. Good managers are not necessarily the most vocal leaders; sometimes they're quiet but effective, like diamonds in the rough.

The paper you and your co-authors wrote came up with a novel method to identify good managers. Can you explain?

It's a hard problem to solve, because part of what makes a good manager is the people they're supervising. If you give a manager a team of workers who aren't very capable, that team is going to do a poor job, and if the workers are all-stars, they will make the manager look good regardless. In other words, when a team succeeds, we don't know how much credit or blame to assign to the manager compared to other members of the team.

To solve that problem, we bring a bunch of people into a controlled lab setting, and we assign them a group task that they must do together. We randomly assign the role of manager to one of the three people on the team, and we ask them to lead their group in the task, and we see how well they do. Then we randomly assign each manager again to another group of workers.

Each time, as a manager, you're getting a different set of people, so we have a way to account for the quality of the workers you're getting. And since we're assigning workers, we can also identify who's a good worker because we can see their performance with different managers.

What do you think the paper's main contributions are to the literature of leadership and management in general?

I think the paper's main contribution is to open the door to the idea that we can be scientific and analytical about selecting managers and that management is not a squishy thing that we can never get our arms around.

We can measure management skill, and measuring it well unlocks huge productivity gains for organizations and for people. We're doing this experiment in a lab; it's not a real-world setting, but we are in talks with several folks to do this in the field. I do think it would work because we're asking people to manage and we're measuring their performance, and we're showing you that there's a repeatable predictive quality to this.

Our contribution is to outline a very simple methodology for measuring who's a good manager, and to say to people that they can use it. Figure it out in your own organization, and you will unlock big productivity gains.

Provided by Harvard Gazette

This story is published courtesy of the Harvard Gazette , Harvard University's official newspaper. For additional university news, visit Harvard.edu .

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