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Does patenting increase the probability of being acquired? Evidence from cross-border and domestic acquisitions

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  • Jyrki Ali-Yrkko
  • Ari Hyytinen
  • Mika Pajarinen

Abstract

A firm that owns a patent has a legal right to exclude. Applying for the patent, however, discloses discovery of an invention by the firm. Both the ownership of the right and the disclosure of the discovery expose the firm to an acquisition, because other firms may be interested in buying the right or the invention for a number of reasons. This idea of patent-driven mergers and acquisitions (M&As) is tested using a large sample of Finnish firms that are mostly private and small. It is found that patenting by a Finnish firm is positively correlated with the probability that the firm is acquired by a foreign firm.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

Volume (Year): 15 (2005)
Issue (Month): 14 ()
Pages: 1007-1017

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Handle: RePEc:taf:apfiec:v:15:y:2005:i:14:p:1007-1017

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References

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Citations

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Cited by:
  1. Frey, Rainer & Hussinger, Katrin, 2006. "The role of technology in M&As: a firm-level comparison of cross-border and domestic deals," Discussion Paper Series 1: Economic Studies 2006,45, Deutsche Bundesbank, Research Centre.
  2. James Foreman-Peck & Tom Nicholls, 2013. "SME takeovers as a contributor to regional productivity gaps," Small Business Economics, Springer, vol. 41(2), pages 359-378, August.
  3. Ali-Yrkkö, Jyrki, 2006. "Technology Sourcing Through Acquisitions – Do High Quality Patents Attract Acquires?," Discussion Papers 1025, The Research Institute of the Finnish Economy.
  4. Wagner, S. & Cockburn, I., 2010. "Patents and the survival of Internet-related IPOs," Research Policy, Elsevier, vol. 39(2), pages 214-228, March.

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