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on Corporate Finance |
| By: | Gugler, Klaus; Szücs, Florian; Wohak, Ulrich |
| Abstract: | We evaluate the impact of big-tech acquisitions on the incentives for investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of venture capital investment and patenting relative to control groups. The results show a clear negative impact on investment, while the effect on innovation depends on the acquirer and period. Both outcomes improve over time, as GAFAM firms become more similar in terms of their product and tech-portfolios, increasing competition. Yet, around 10% of acquisitions impact both metrics negatively. |
| Keywords: | M&A; big-tech; innovation; investment |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:44832240&r=cfn |
| By: | Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Florian Szücs (Department of Economics, Vienna University of Economics and Business); Ulrich Wohak (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We evaluate the impact of big-tech acquisitions on the incentives for investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of venture capital investment and patenting relative to control groups. The results show a clear negative impact on investment, while the effect on innovation depends on the acquirer and period. Both outcomes improve over time, as GAFAM firms become more similar in terms of their product and tech-portfolios, increasing competition. Yet, around 10% of acquisitions impact both metrics negatively. |
| Keywords: | M&A, big-tech, innovation, investment |
| JEL: | D22 G34 K21 L41 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp340&r=cfn |
| By: | Abramov Alexander (RANEPA); Radygin Alexander (Gaidar Institute for Economic Policy); Chernova Maria (RANEPA) |
| Abstract: | The year 2022 was one of the most difficult periods for the global financial market in many years. Due to a unique combination of adverse economic and geopolitical factors, investments in almost all assets, with few exceptions, had negative returns in 2022. Even investment assets such as government securities, precious metals, real estate and cryptocurrency failed to perform their functions of hedging investor returns against losses. In January-February 2023, many financial assets began to show positive returns again, however, this trend gradually slowed down under the influence of the same factors that negatively affected the financial market in 2022. |
| Keywords: | Russian economy, stock market, bond market, corporate bond market, derivatives market, private investors |
| JEL: | G01 G12 G18 G21 G24 G28 G32 G33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2023-1275&r=cfn |
| By: | Andrea Ugolini; Juan C. Reboredo; Javier Ojea Ferreiro |
| Abstract: | We study whether the credit default swap (CDS) spreads of firms reflect the risk from climate transition. We first construct a climate transition risk (CTR) factor by using information on the vulnerability of a firm’s value to the transition to a low-carbon economy. We then document how this factor shifts the term structure of the CDS spreads of more vulnerable firms but not of less vulnerable firms. Considering the impact of different climate transition policies on the CTR factor, we find that these policies have asymmetric and significant economic impacts on the credit risk of more vulnerable firms, and negligible effects on other firms. |
| Keywords: | Climate change; Credit risk management; Econometric and statistical methods |
| JEL: | C24 G12 G32 Q54 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-38&r=cfn |
| By: | McShane, William; Sevilir, Merih |
| Abstract: | We propose a novel mechanism through which established firms contribute to the startup ecosystem: the allocation of R&D tax credits to startups via the M&A channel. We show that when established firms become eligible for R&D tax credits, they increase their R&D and M&A activity. In particular, they acquire more venture capital (VC)-backed startups, but not non-VC-backed firms. Moreover, the impact of R&D tax credits on firms' R&D is increasing with their acquisition of VC-backed startups. The results suggest that established firms respond to R&D tax credits by acquiring startups rather than solely focusing on increasing their R&D intensity in-house. We also highlight evidence that startups do not appear to benefit from R&D tax credits directly, perhaps because they typically lack the taxable income necessary to directly benefit from the tax credits. In this context, established firms can play an intermediary role by acquiring startups and reallocating R&D tax credits, effectively relaxing the financial constraints faced by startups. |
| Keywords: | indirect effects, innovation, mergers and acquisitions (M&A), research and development (R&D), startups, tax credits |
| JEL: | G00 G34 H24 M13 O31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:152023&r=cfn |
| By: | Eichfelder, Sebastian; Knaisch, Jonas; Schneider, Kerstin |
| Abstract: | We analyze how tax incentives (bonus depreciation) affect real investment choices of firms by exploiting an exogenous variation in regional tax regulation in former East Germany (Development Area Law, DAL). Our rich administrative panel data for the universe of German manufacturing firms at the establishment level allow us not only to identify an aggregate effect, but also to identify which types of investment (equipment, buildings, land) are are most affected (asset structure). Our baseline results suggest that the DAL increased real gross investment by 16.0% to 19.9%. This aggregate effect is primarily driven by additional investments in buildings (76.6% to 92.3%) and land (108.0% to 121.3%) investments, which have the longest regular depreciation periods in absence of bonus depreciation. The impact on equipment investment is significantly smaller (7.3% to 10.5%). Hence, firms did not only increase their real investment, but also adjusted their asset structure in response to the tax incentive. Addressing firm heterogeneity, we observe a stronger response for firms with more than one business establishment and large firms, thereby providing evidence of tax planning opportunities (multi-establishment firms) and relatively low tax planning costs (large firms) enhancing the effect of bonus depreciation on investment. There is only week evidence of financial reporting costs (accounting incentives) moderating the tax induced effect on firms' real investment choices. |
| Keywords: | business taxation, user cost of capital, tax elasticity, real investment |
| JEL: | G11 H25 H32 M41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:278&r=cfn |