| Abstract: |
This paper provides empirical evidence on the relationship between
cross-border mergers and acquisitions (M&A) and innovation. For the empirical
analysis a unique firm-level data set is constructed that combines balance
sheet data and an M&A database with information on patent applications. Within
three years after a cross-border M&A, patent applications filed by the merged
entity increase by more than 30%. Splitting patent applications by the
inventors country it is found that the positive association with post-merger
patenting is mainly driven by patents invented in the countries of the
acquirers headquarter and its previous subsidiaries. In contrast, there is on
average a decrease in patent applications invented in the targets country of
more than 60%. Accounting for endogeneity of international acquisitions by
estimating dynamic count data models and applying instrumental variable
techniques, the results indicate that part of this correlation stems from a
causal effect. -- |