 Acquiring for innovation: Evidence from the U.S. technology industryMattheo Kaufmann and Dirk Schiereck Journal of Economic Dynamics and Control, 2023, vol. 152, issue C Abstract: We investigate the effect of corporate innovation on mergers and acquisitions (M&A). Using a sample of 786 public-to-public transactions in the U.S. technology sector, we show that acquirers are willing to pay higher premiums for more innovative target firms. This effect is amplified by the acquirer's own level of innovativeness as more innovative acquirers are willing to pay higher premiums for innovative targets than non-innovative acquirers. We further document significant strategic reactions of rival firms. In the aftermath of the M&A, all acquirer rivals increase their R&D spending but the effect is more pronounced for innovative rivals than for non-innovative ones. Innovative acquirer rivals are also more likely to acquire a technology firm in the aftermath of their competitor's M&A announcement than their non-innovative peers. The similarity between acquirers and their rivals shrinks in the post-acquisition period, which may be caused by rival firms extending the breadth of their technological search in response to the acquisition. Keywords: Innovation; Patents; Mergers and acquisitions (M&A); Takeover premium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:152:y:2023:i:c:s0165188923000799 DOI: 10.1016/j.jedc.2023.104673 Access Statistics for this article Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok More articles in Journal of Economic Dynamics and Control from Elsevier |
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