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Intellectual property rights enforcement and mergers and acquisitions: Evidence from China

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  • Shi, Xiaoxuan
  • Song, Yuchen
  • Wang, Xi

Abstract

In this paper, the impact of intellectual property rights (IPR) enforcement on merger and acquisition (M&A) activity based on provincial data in China is examined. We document a significant increase in the probability of implementing M&A bids in provinces with efficient IPR enforcement. The result is robust after considering endogeneity and using alternatives to IPR measurements. In addition, cash-financed and local M&A bids are more likely to occur in provinces with better IPR enforcement. Our results suggest that increasing R&D expenditures, alleviating financing constraints and increasing product market competition are the possible mechanisms through which IPR enforcement affects the probability of M&A activity.

Suggested Citation

  • Shi, Xiaoxuan & Song, Yuchen & Wang, Xi, 2023. "Intellectual property rights enforcement and mergers and acquisitions: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x2300080x
    DOI: 10.1016/j.pacfin.2023.102014
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    More about this item

    Keywords

    Intellectual property rights enforcement; Mergers and acquisitions; R&D expenditures; Financial constraints; Product market competition;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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