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M&As and Their Economic Effects on Target Companies

Author

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  • Ali-Yrkkö, Jyrki
  • Mattila, Juri
  • Pajarinen, Mika
  • Ylhäinen, Ilkka

Abstract

This study examines mergers and acquisitions and their economic impact on companies. The study examined which companies in Finland become the targets of acquisitions, how the economic activities of the target companies develop after the change of ownership and whether there is a difference between domestic and foreign acquisitions in these respects. The study was conducted using firm-level data that included nearly 2,000 acquisitions, supplemented by a qualitative review of 19 research interviews. The results of the study show that companies’ innovation activities have a positive relation to the likelihood of being acquired, especially by foreign buyers. However, foreign acquisitions did not have a significant impact on the development of the value added, productivity, profitability or employment of target companies when compared with the control group.

Suggested Citation

  • Ali-Yrkkö, Jyrki & Mattila, Juri & Pajarinen, Mika & Ylhäinen, Ilkka, 2022. "M&As and Their Economic Effects on Target Companies," ETLA Reports 125, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:125
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    More about this item

    Keywords

    Mergers and acquisitions; M&A; Impact; Foreign ownership; Foreign company; Productivity;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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