Acquisition for innovations? M&A intensity and intra-firm innovation reallocations

Shuxun Wang, Kai Wu and Seiwai Lai

Research in International Business and Finance, 2022, vol. 62, issue C

Abstract: We investigate how M&A activities are used to allocate innovation resources within firm boundaries. We find that Chinese listed firms exhibit strong intra-firm innovation reallocation behaviors following M&A activities from 2007 to 2017. Specifically, they shift innovation activities to subsidiary firms. The intra-firm innovation reallocation concentrates on major restructuring and related-party deals. In addition, firms in the decline stage of life cycles are more likely to use innovation reallocation behaviors after M&A. Further analysis shows that the innovation reallocation behaviors are more visible in firms with low financial constraints, high product market competition, and low productivity. Besides, the innovation reallocation is value-enhancing for listed firms in general. Our findings highlight the intra-firm innovation reallocation as an effective innovation strategy.

Keywords: M&A intensity; Firm innovation; R&D reallocation (search for similar items in EconPapers)
JEL-codes: D22 L13 L4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:62:y:2022:i:c:s027553192200109x

DOI: 10.1016/j.ribaf.2022.101721

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