Cross-border acquisitions and R&D: Unpacking the impact on acquirers and targets

Victor Zitian Chen, Daniel M. Shapiro and Jing Li

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: We study the post acquisition R&D of both targets and acquirers involved in cross-border acquisitions by developing and estimating a two equation model that explicitly accounts for cross-border knowledge flows. We employ a sample of 3,243 firm-year observations, representing 299 cross-border deals between 28 home and 34 host markets over 15 years. Results suggest that while the acquisition disrupts the R&D trajectory of both acquirers and targets, R&D complementarities result in more R&D in both acquirers and targets. However, these effects are asymmetrical: post-acquisition R&D increases are higher in the acquirer than in the target. The overall outcome of acquisitions appears to favor R&D in the acquirer.

Keywords: Cross-border acquisitions; Post-acquisition performance; R&D; R&D location (search for similar items in EconPapers)
JEL-codes: F21 F23 G34 O3 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000204

DOI: 10.1016/j.frl.2022.102691

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