The role of technology in M&As: a firm-level comparison of cross-border and domestic deals

Rainer Frey and Katrin Hussinger ()

No 2006,45, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank, Research Centre

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 limited companies 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 crossborder 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)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ipr and nep-tid
Date: Written 2006
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Related works:
Working Paper: The Role of Technology in M&As: A Firm Level Comparison of Cross-Border and Domestic Deals (2006)
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