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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.

Suggested Citation

  • Jyrki Ali-Yrkko & Ari Hyytinen & Mika Pajarinen, 2005. "Does patenting increase the probability of being acquired? Evidence from cross-border and domestic acquisitions," Applied Financial Economics, Taylor & Francis Journals, vol. 15(14), pages 1007-1017.
  • Handle: RePEc:taf:apfiec:v:15:y:2005:i:14:p:1007-1017 DOI: 10.1080/09603100500186978
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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.
    2. repec:spr:scient:v:97:y:2013:i:3:d:10.1007_s11192-013-1010-z is not listed on IDEAS
    3. Wagner, S. & Cockburn, I., 2010. "Patents and the survival of Internet-related IPOs," Research Policy, Elsevier, pages 214-228.
    4. 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.
    5. Torsten Gerpott, 2009. "Forschung & Entwicklung und technologieorientierte Unternehmensakquisitionen," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 20(1), pages 9-41, May.
    6. repec:spr:scient:v:111:y:2017:i:3:d:10.1007_s11192-017-2354-6 is not listed on IDEAS
    7. Ali-Yrkkö, Jyrki, . "Essays on the Impacts of Technology Development and R&D Subsidies," ETLA A, The Research Institute of the Finnish Economy, number 43.
    8. Ali-Yrkkö, Jyrki, 2006. "Technology Sourcing Through Acquisitions Do High Quality Patents Attract Acquires?," Discussion Papers 1025, The Research Institute of the Finnish Economy.

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