Abstract

http://ssrn.com/abstract=2181152
 
 

References (50)



 
 

Citations (5)



 
 

Footnotes (28)



 


 



R&D and the Incentives from Merger and Acquisition Activity


Gordon M. Phillips


University of Southern California; National Bureau of Economic Research (NBER)

Alexei Zhdanov


University of Lausanne - Institute of Banking and Finance (IBF); Swiss Finance Institute

August 15, 2012


Abstract:     
We provide a model and empirical tests showing how an active acquisition market affects firm incentives to innovate and conduct R&D. Our model shows that small firms optimally may decide to innovate more when they can sell out to larger firms. Large firms may find it disadvantageous to engage in an "R&D race" with small firms, as they can obtain access to innovation through acquisition. Our model and evidence also shows that the R&D responsiveness of firms increases with demand, competition and industry merger and acquisition activity. All of these effects are stronger for smaller firms than for larger firms.

Number of Pages in PDF File: 65

Keywords: mergers, innovation, R&D

JEL Classification: O31, O32, G34, D43, L13

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Date posted: November 27, 2012  

Suggested Citation

Phillips, Gordon M. and Zhdanov, Alexei, R&D and the Incentives from Merger and Acquisition Activity (August 15, 2012). Available at SSRN: http://ssrn.com/abstract=2181152 or http://dx.doi.org/10.2139/ssrn.2181152

Contact Information

Gordon M. Phillips (Contact Author)
University of Southern California ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Alexei Zhdanov
University of Lausanne - Institute of Banking and Finance (IBF) ( email )
CH-1015 Lausanne
Switzerland
Swiss Finance Institute
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland
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