Do diversified M&As improve R&D activity? Evidence from Chinese listed companies

Songsheng Mao and Gongyan Yang

Finance Research Letters, 2025, vol. 72, issue C

Abstract: Using the sample merger and acquisition (M&A) data of China's A-share listed companies from 2007 to 2022, this study adopts the multiphase difference-in-differences (DID) methodology to examine the heterogeneity of diversified M&A activities and their effects on enterprise innovation efficiency. Findings indicate that diversified M&As hinder the advancement of firms’ innovation efficiency. Diversified M&As have a heterogeneous impact on enterprise innovation. Specifically, young enterprises, enterprises with limited cash flow, and enterprises in highly competitive industries experience a greater negative impact on innovation efficiency. Furthermore, long-term diversified operations with minimal business changes and a substantial decrease in leverage ratio harm innovation efficiency. These conclusions broaden the understanding of M&A's innovative effects and provide a practical foundation for domestic enterprises’ M&A decision-making.

Keywords: Diversified M&As; Innovation investment; Difference-in-differences model (search for similar items in EconPapers)
JEL-codes: C12 C33 C36 G11 G34 O32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324014946

DOI: 10.1016/j.frl.2024.106465

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