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Pre-Evaluating the Technical Efficiency Gains from Potential Mergers and Acquisitions in the IC Design Industry

Ying Li (), Yung-Ho Chiu (), Tai-Yu Lin () and Tzu-Han Chang ()
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Ying Li: Business School, Sichuan University, Wangjiang Road No. 29, Chengdu, 610064, P. R. China
Tai-Yu Lin: #x2021;Department of Business Administration, National Cheng Kung University, No. 1, University Road, Tainan City 701, Taiwan
Tzu-Han Chang: #x2020;Department of Economics, Soochow University, 56, Kueiyang St., Sec. 1, Taipei 10048, Taiwan, R.O.C.

International Journal of Information Technology & Decision Making (IJITDM), 2020, vol. 19, issue 02, 525-559

Abstract: Increased global competition has led to a slowdown in Taiwan’s domestic semiconductor industry growth, which has resulted in many semiconductor companies reducing their investments and or seeking mergers and acquisitions (M & As) to increase market power, expand their business territories or increase their competitive edge. However, as there is general uncertainty regarding the efficiencies to be gained from these M & As, there has been an increase in M & A supervision. While past research has explored company operations and management efficiency after mergers, there has been less focus on potential mergers. Therefore, this study used a resample slacks-based measure (RSBM) and merger potential gains models to evaluate potential merger efficiency gains. Data on 29 Taiwanese-listed integrated circuit (IC) design industry firms were collected to evaluate the efficiency of potential M & As, from which it was found that the potential M & As efficiencies had positive and negative values, indicating that efficiency gains were not guaranteed. A positive value was found for a potential M & A between MTK & NOVATEK and MTK & DAVICOM, which meant that a potential M & A would increase operating efficiencies and reduce costs.

Keywords: DEA; IC design industry; efficiency; merger; merger potential gains (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S021962202050008X

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