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The role of technology in M&As: a firm-level comparison of cross-border and domestic deals

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  • Frey, Rainer
  • Hussinger, Katrin

Abstract

Technological change is often hypothesized as one of the main drivers of merger activities. This paper analyzes the role of technology in mergers and acquisitions (M&As) at the firm level. Based on a newly created data set that combines financial information and patent data for public limited companies in Europe as well as country level variables, we apply a structural model to investigate technology-related motivations behind merger formation. Distinguishing between cross-border and domestic M&As, we find that technological relatedness of the M&A partners reduces uncertainty and the expected risk of failure associated with cross-border acquisitions significantly, whereas there is no evidence for technological complementarities driving domestic M&As. The relevance of technology for crossborder M&As further illustrates the international character of technology markets. --

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2006,45.

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Date of creation: 2006
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Handle: RePEc:zbw:bubdp1:5194

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Keywords: domestic versus cross-border M&As; technological relatedness; market relatedness;

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Cited by:
  1. Joel Stiebale, 2010. "The Impact of Foreign Acquisitions on the Investors‘ R&D Activities – Firm-level Evidence," Ruhr Economic Papers 0161, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Ulrich Kaiser & Joachim Wagner, 2008. "Neue Möglichkeiten zur Nutzung vertraulicher amtlicher Personen- und Firmendaten," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 329-349, 08.
  3. Joel Stiebale & Frank Reize, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 0050, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Sebastian Hügelschäffer & Daniel Kromer & Alexander Lipponer, 2009. "Die deutsche Statistik über Direktinvestitionen: Neuerungen und wissenschaftliche Nutzung," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 3(3), pages 157-167, November.
  5. Hussinger, Katrin, 2007. "Inventors? Response to Firm Acquisitions," ZEW Discussion Papers 07-078, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.

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