The Role of Technology in M&As: A Firm Level Comparison of Cross-Border and Domestic Deals

Rainer Frey and Katrin Hussinger

No 06-069, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Technological change is often hypothesized as one of the main drivers of merger activities. This paper analyzes the role of technology in mergers and acquisitions (M&As) at the firm level. Based on a newly created data set that combines financial information and patent data for public firms in Europe as well as country level variables, we apply a structural model to investigate technology-related motivations behind merger formation. Distinguishing between cross-border and domestic M&As, we find that technological relatedness of the M&A partners reduces uncertainty and the expected risk of failure associated with cross-border acquisitions significantly, whereas there is no evidence for technological complementarities driving domestic M&As. The relevance of technology for cross-border M&As further illustrates the international character of technology markets.

Keywords: domestic versus cross-border M&As; technological relatedness; market relatedness (search for similar items in EconPapers)
JEL-codes: C25 G34 O32 O34 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-com, nep-ipr, nep-pr~ and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Working Paper: The role of technology in M&As: a firm-level comparison of cross-border and domestic deals (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5463

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