Corporate Innovations and Mergers and Acquisitions

78 Pages Posted: 26 Aug 2011 Last revised: 6 Nov 2014

Jan Bena

University of British Columbia - Sauder School of Business

Kai Li

University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 8, 2012

Abstract

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

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

Jan Bena (Contact Author)

University of British Columbia - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
+1 604 822 8490 (Phone)

HOME PAGE: http://www.janbena.com

Kai Li

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)

HOME PAGE: http://finance.sauder.ubc.ca/~kaili

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

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