R&D Intensity and Acquisition and Divestiture of Corporate Assets: Evidence from Japan
Aoyama Gakuin University
April 8, 2011
Journal of Economics and Business, Vol. 61, No. 5, 2009
This article provides evidence from Japanese acquisitions and divestitures after the late 1990s on the effect of corporate R&D to stimulate inter-firm asset trade. Consistent with the notion that R&D increases a firm's opportunities for and ability to profit from synergy with external assets, regressions performed on a sample of publicly traded manufacturers reveal that R&D intensity and the breadth of patented technologies positively and significantly correlate with a firm's probabilities to acquire and sell off assets. The link of R&D and divestiture is qualitatively homogeneous across industries and time but the positive and significant R&D-acquisition link concentrates in industries where the interdependence of firms’ innovative activities is relatively high and time when firms likely had large pent-up demand for asset trade.
Keywords: R&D, Patent, Acquisition, Divestiture, Japanese firm
JEL Classification: G34, L23, O32Accepted Paper Series
Date posted: April 12, 2011
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