Does access to patent information help technological acquisitions? Evidence from patent library openings

Abstract

Technology acquirers face significant information asymmetry when identifying appropriate acquisition targets. Exploiting plausibly exogenous variation in technological information gathering costs caused by staggered openings of patent libraries, we find firms become more active in technological acquisitions following local patent library openings. In addition, acquirers prefer targets that are geographically or technologically close to a less extent, technology M&A completion rates increase and performance improves, and post-merger innovation output enhances through more collaboration between acquirers’ and targets’ inventors. Overall, our study sheds new light on the importance of information gathering costs in corporate takeovers and the search for human capital synergies.

Keywords: Mergers and Acquisitions; Patent and Trademark Depository Library; Patent Information; Information Gathering Costs

JEL Classification: G34, O3, O34, O38