IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp1122.html
   My bibliography  Save this paper

R&D and the Market for Acquisitions

Author

Listed:
  • Gordon PHILLIPS

    (University of Maryland and NBER)

  • Alexei ZHDANOV

    (University of Lausanne and Swiss Finance Institute)

Abstract

We provide a model and empirical tests showing how an active acquisition market positively affects firm incentives to innovate and conduct R&D. Our model shows how the incentives of small firms to conduct R&D in order to innovate increase with competition, demand and the probability that they are taken over. In contrast, we show that large firms optimally may decide to purchase smaller innovative firms and conduct less R&D themselves. Empirically, we document that the R&D of small firms responds more than the R&D of larger firms to demand shocks and the probability of being an acquisition target. The results also show that firm R&D increases with product-market competition and with industry acquisition liquidity and that these effects are stronger for smaller firms.

Suggested Citation

  • Gordon PHILLIPS & Alexei ZHDANOV, 2011. "R&D and the Market for Acquisitions," Swiss Finance Institute Research Paper Series 11-22, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1122
    as

    Download full text from publisher

    File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1856034
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Macias, Antonio & Pirinsky, Christo, 2015. "Employees and the market for corporate control," Journal of Corporate Finance, Elsevier, vol. 31(C), pages 33-53.

    More about this item

    Keywords

    Acquisitions; Research and Development; Innovation; Competition;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp1122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.