Does the failure of corporate mergers and acquisitions affect innovation efficiency

Yujie Liu and Yiwei Wang

International Review of Financial Analysis, 2025, vol. 97, issue C

Abstract: This study examines the effects of failed corporate mergers and acquisitions (M&A) on the innovation activities of manufacturing firms. It analyses the mechanism behind this impact by drawing on relevant literature and theories. The analysis is conducted using panel data from 2382 A-share listed manufacturing firms between 2009 and 2022. The findings indicate that following the collapse of corporate mergers and acquisitions (M&A), manufacturing firms have decreased their investment in innovation, resulting in ineffective innovation outcomes and diminished innovation capacities. Furthermore, the research reveals that media attention and ESG performance act as mediators in the relationship between M&A failure and the decline of innovative capability. This paper enhances the study on the efficiency of innovation in manufacturing companies and offers evidence to support the improvement and execution of unsuccessful mergers and acquisitions. Policy makers should prioritize the significance of innovation capability during mergers and acquisitions (M&As) and implement suitable measures to safeguard and enhance innovation capability. Additionally, they should effectively handle media attention and boost environmental, social, and governance (ESG) performance. Implementing this strategy will enhance the efficacy of Mergers and Acquisitions (M&As) and alleviate the adverse effects on organizations' innovative capacities.

Keywords: Corporate M&A failure; Innovation efficiency; Double difference model; Media attention; ESG performance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:97:y:2025:i:c:s1057521924007531

DOI: 10.1016/j.irfa.2024.103821

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