Cross-Border Mergers and Acquisitions for Innovation

63 Pages Posted: 24 Jun 2013 Last revised: 27 Nov 2020

See all articles by Po-Hsuan Hsu

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Peng Huang

University of New South Wales - Australian School of Business

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

Ronan Powell

University College Dublin (UCD) - Michael Smurfit Graduate School of Business

Date Written: June 20, 2013

Abstract

We propose and empirically examine cross-border mergers and acquisitions (M&As) as an important dimension of firms’ innovation strategies. Our empirical analyses, based on a sample of 85,591 M&A deals from 57 countries, show that innovative firms in low innovation countries are more likely to undertake cross-border deals, and select innovative targets when doing so, as compared with innovative firms in high innovation countries. We also find that these cross-border M&As earn higher announcement stock returns when compared to domestic deals. We show that innovative firms from low innovation countries produce more patents, and invest more in research and development (R&D) after they acquire targets in high innovation countries. This study provides new evidence to the absorptive capacity theory from an international perspective.

Keywords: Innovation, mergers, acquisitions, cross-border

JEL Classification: G34

Suggested Citation

Hsu, Po-Hsuan and Huang, Peng and Humphery-Jenner, Mark and Powell, Ronan G., Cross-Border Mergers and Acquisitions for Innovation (June 20, 2013). Journal of International Money and Finance, Forthcoming, Asian Finance Association (AsianFA) 2014 Conference Paper, 26th Australasian Finance and Banking Conference 2013, Available at SSRN: https://ssrn.com/abstract=2282430 or http://dx.doi.org/10.2139/ssrn.2282430

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Peng Huang

University of New South Wales - Australian School of Business ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Mark Humphery-Jenner (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Ronan G. Powell

University College Dublin (UCD) - Michael Smurfit Graduate School of Business ( email )

Blackrock, Co. Dublin
Ireland

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