The Role of Technology in M&As: A Firm Level Comparison of Cross-Border and Domestic Deals
Rainer Frey and
Katrin Hussinger ()
No 06-069, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research
Technological change is often hypothesized as one of the main drivers of merger activities. This paper analyzes the role of technology in mergers and acquisitions (M&As) at the firm level. Based on a newly created data set that combines financial information and patent data for public firms in Europe as well as country level variables, we apply a structural model to investigate technology-related motivations behind merger formation. Distinguishing between cross-border and domestic M&As, we find that technological relatedness of the M&A partners reduces uncertainty and the expected risk of failure associated with cross-border acquisitions significantly, whereas there is no evidence for technological complementarities driving domestic M&As. The relevance of technology for cross-border M&As further illustrates the international character of technology markets.
Keywords: domestic versus cross-border M&As; technological relatedness; market relatedness (search for similar items in EconPapers)
JEL-codes: C25 G34 O32 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ipr, nep-pr~ and nep-tid
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Working Paper: The role of technology in M&As: a firm-level comparison of cross-border and domestic deals (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5463
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