Consolidating Product Lines via Mergers and Acquisitions: Evidence from the USPTO Trademark Data

62 Pages Posted: 14 Jul 2017 Last revised: 5 May 2021

See all articles by Po-Hsuan Hsu

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance; National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Kai Li

University of British Columbia (UBC) - Sauder School of Business; Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR); European Corporate Governance Institute (ECGI); Canadian Sustainable Finance Network (CSFN)

Xing Liu

Tsinghua University - PBC School of Finance

Hong Wu

Fudan University - School of Economics

Date Written: May 5, 2021

Abstract

Using a new trademark-based product market competition measure and a novel trademark-merger dataset over the period 1983-2016, we show that companies facing greater product market competition are more likely to be acquirers. We further show that postmerger, compared to their non-acquiring peers, acquirers consolidate their product offerings by discontinuing more existing product lines and developing fewer new product lines. Using a quasi-experiment based on bids withdrawn due to exogenous reasons helps us establish the causal effect of deal completion on product market consolidation. We conclude that acquisitions create product market synergies by cutting overlapping product offerings to achieve cost efficiency.

Keywords: trademarks; product lines; mergers and acquisitions; product market competition; cost efficiency

JEL Classification: G34, O32, O34

Suggested Citation

Hsu, Po-Hsuan and Li, Kai and Liu, Xing and Wu, Hong, Consolidating Product Lines via Mergers and Acquisitions: Evidence from the USPTO Trademark Data (May 5, 2021). Available at SSRN: https://ssrn.com/abstract=3002520 or http://dx.doi.org/10.2139/ssrn.3002520

Po-Hsuan Hsu

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

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

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

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://https://sites.google.com/view/kaili/home

Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

China Academy of Financial Research (CAFR) ( email )

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Shanghai P.R.China, 200030
China

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Canadian Sustainable Finance Network (CSFN) ( email )

Queens University
Kingston, ON
Canada

HOME PAGE: http://https://smith.queensu.ca/centres/isf/research/network.php

Xing Liu

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengdu Road
Haidian District
Beijing, 100083
China

HOME PAGE: http://www.xing-liu.com/

Hong Wu (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

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