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Do diversified M&As improve R&D activity? Evidence from Chinese listed companies

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  • Mao, Songsheng
  • Yang, Gongyan

Abstract

Using the sample merger and acquisition (M&A) data of China's A-share listed companies from 2007 to 2022, this study adopts the multiphase difference-in-differences (DID) methodology to examine the heterogeneity of diversified M&A activities and their effects on enterprise innovation efficiency. Findings indicate that diversified M&As hinder the advancement of firms’ innovation efficiency. Diversified M&As have a heterogeneous impact on enterprise innovation. Specifically, young enterprises, enterprises with limited cash flow, and enterprises in highly competitive industries experience a greater negative impact on innovation efficiency. Furthermore, long-term diversified operations with minimal business changes and a substantial decrease in leverage ratio harm innovation efficiency. These conclusions broaden the understanding of M&A's innovative effects and provide a practical foundation for domestic enterprises’ M&A decision-making.

Suggested Citation

  • Mao, Songsheng & Yang, Gongyan, 2025. "Do diversified M&As improve R&D activity? Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324014946
    DOI: 10.1016/j.frl.2024.106465
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    References listed on IDEAS

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    More about this item

    Keywords

    Diversified M&As; Innovation investment; Difference-in-differences model;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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