Abstract:
In recent years, accessing to the target's technology is becoming one of the important motives of M&A. Using a large patent-merger data in Chinese stock markets over the period of 1998 to 2015, and applying event study, calendar time portfolio method and multiple regression model, we find that key factor of promoting acquisition performance is the target innovation. (1) We show that acquirers that acquiring innovative target will get significant higher CAR and BHAR; (2) In the long run, while innovative acquirers gain more returns, in the short run, their performance has no significant difference with those non-innovative acquirers. (3) According to whether targets and acquirers have patent’s application before M&A, we divided our sample into four groups and find acquisitions featured as “innovative acquirer-innovative target” and “non-innovative acquirer-innovative target” relatively have higher returns compared to other groups. However, when the acquirer is also innovative, it can help to produce innovation synergy which promote the long-term acquisition performance; a finding of considerable importance for corporate managers and investors.
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