Corporate Innovations and Mergers and Acquisitions

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2013-09-12

Summary:

Editor's Note: The following post comes to us from Jan Bena and Kai Li, both of the Finance Division at the University of British Columbia.

It has long been argued that synergies are key drivers of mergers and acquisitions (M&As), and that many M&As occur due to technology reasons. However, there is little direct evidence of whether and how synergies in the technology space drive individual firms’ decisions to participate in M&As, and of how they affect merger outcomes. In our paper, Corporate Innovations and Mergers and Acquisitions, forthcoming in the Journal of Finance, we first examine the relation between characteristics of corporate innovation activities and whether a firm becomes an acquirer or a target firm. We then study whether technological overlap between firm pairs affects transaction incidence. Finally, using a sample of bids withdrawn due to reasons exogenous to innovation as a control sample, we estimate the effect of a merger on future innovation output when there is pre-merger technological overlap between merging firms. Our large and unique patent-merger data set over the period 1984 to 2006 allows us to construct targeted measures of innovation output and technological overlap, extending the analysis of Hoberg and Phillips (2010) in product markets.

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Link:

http://blogs.law.harvard.edu/corpgov/2013/09/12/corporate-innovations-and-mergers-and-acquisitions/

From feeds:

Blogs.law Aggregation Hub » The Harvard Law School Forum on Corporate Governance and Financial Regulation

Tags:

innovation mergers & acquisitions academic research patents r&d kai li jan bena

Authors:

R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation,

Date tagged:

09/12/2013, 10:40

Date published:

09/12/2013, 09:13