The Oscar Goes to…: High-tech Firms’ Acquisitions in Response to Rivals’ Technology Breakthroughs

71 Pages Posted: 28 Jul 2016 Last revised: 29 Jun 2020

See all articles by I‐Ju Chen

I‐Ju Chen

Yuan Ze University - College of Management

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Micah S. Officer

Loyola Marymount University - Department of Finance

Yanzhi Wang

National Taiwan University - Department of Finance

Date Written: June 29, 202

Abstract

We examine how firms react to their competitors’ highly publicized technology breakthroughs measured by the renowned R&D 100 Award. These awards have been granted to top 100 technological inventions every year since 1965 and have come to be known as the “Oscar of Invention” (e.g., Verhoeven, Bakkera, and Veugelers, 2016). We find that a firm’s propensity to acquire another firm significantly increases after its competitors win these awards. A causal interpretation of our finding is supported by instrumental variable analysis, coarsened exact matched samples, and differential effects of award winners vs. finalists. Such award-driven acquisitiveness is more pronounced among firms with more confident CEOs or in industries with a shorter technology lifecycle and a higher R&D intensity. Moreover, the acquirers with rivals winning awards pursue innovative targets whose products overlap with those rivals, confirming these acquirers’ catch-up purpose.

Keywords: Mergers and acquisitions, R&D; innovation, patents, R&D 100 Award

JEL Classification: G32, M41, O32

Suggested Citation

Chen, I-Ju and Hsu, Po-Hsuan and Officer, Micah S. and Wang, Yanzhi, The Oscar Goes to…: High-tech Firms’ Acquisitions in Response to Rivals’ Technology Breakthroughs (June 29, 202). Available at SSRN: https://ssrn.com/abstract=2815148 or http://dx.doi.org/10.2139/ssrn.2815148

I-Ju Chen

Yuan Ze University - College of Management ( email )

135, Far-East Rd.,
Chung-Li, Taoyuan 32003
Taiwan

Po-Hsuan Hsu

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

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

Micah S. Officer (Contact Author)

Loyola Marymount University - Department of Finance ( email )

Los Angeles, CA 90045
United States

Yanzhi Wang

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

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