78 Pages Posted: 26 Aug 2011 Last revised: 6 Nov 2014
Date Written: September 8, 2012
Using a large and unique patent-merger dataset over the period 1984 to 2006, we show that companies with large patent portfolios and low R&D expenses are acquirers, while companies with high R&D expenses and slow growth in patent output are target firms. Further, technological overlap between any two firms has a positive effect on transaction incidence, and this effect is reduced for firm pairs that overlap in product markets. We also show that acquirers with prior technological linkage to their target firms produce more patents afterwards. We conclude that synergies obtained from combining innovation capabilities are important drivers of acquisitions.
Keywords: Innovation, mergers and acquisitions, R&D expenses, patents, synergies, technological overlap
JEL Classification: G34, O32
Suggested Citation: Suggested Citation
Bena, Jan and Li, Kai, Corporate Innovations and Mergers and Acquisitions (September 8, 2012). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1917215 or http://dx.doi.org/10.2139/ssrn.1917215