Corporate Innovations and Mergers and Acquisitions

Bena, Jan; Kai, Li

doi:10.2139/ssrn.1727401

Cited by 84 publications

(92 citation statements)

References 24 publications

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“…We show that the stage of development of innovation is important to predicting vertical acquisitions. Our results thus complement Bena and Li (2013) and Seru (2014), who examine the impact of acquisitions on ex post innovation rates, and Phillips and Zhdanov (2013) who examine how acquisitions affect the incentives for R&D investments.…”

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confidence: 52%

The Incentives for Vertical Mergers and Vertical Integration

2013

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The Incentives for Vertical Mergers and Vertical Integration

2013

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“…We measure the number of citations to each patent following Bena and Li (2014). First, we consider only patents granted in year t that have an application year that precedes the granting year by at most three years.…”

Section: Measure Of Expected Competition Intensitymentioning

confidence: 99%

Cash Holdings, Competition, and Innovation

Lyandres

Palazzo

2016

J. Financ. Quant. Anal.

214

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We demonstrate theoretically and empirically that strategic considerations are important in shaping cash policies of innovative firms. In our model, firms decide whether to invest in innovation while facing uncertainty regarding the structure of ensuing product markets. Cash holdings reduce innovative firms' dependence on external financing and, therefore, serve as a commitment device for future investment. We show that firms' equilibrium cash holdings are related to expected intensity of competition in future product markets and that this relation is affected by the degree of financial constraints that firms face. We test our model using a sample of firms that are direct competitors in innovation. Consistent with the strategic motive for hoarding cash, we show that firms' cash holdings are negatively affected by their rivals' cash holding choices, more so when competition is expected to be intense. In addition, we examine two instances of exogenous shocks to firms' costs of external financing and show that financial constrains influence the relation between firms' cash holdings and expected competition intensity in ways consistent with the model's predictions.

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“…7 Our empirical results complement HPP's findings by showing that an important dimension of product market threats, rivalry induced by competitors' R&D efforts, has a significant effect on cashing holdings. Third, recent studies have presented evidence that corporate innovations play an important role in equity market and corporate mergers and acquisitions (e.g., Hsu, 2009;Hirshleifer et al, 2013;Bena and Li, 2013;Fresard, Hoberg and Phillips, 2013). However, the role of firm-level R&D spillovers in determining corporate financial decisions has received insufficient attention.…”

Section: Introductionmentioning

confidence: 99%

Technology spillovers and corporate cash holdings

Qiu

Wan

2015

Journal of Financial Economics

142

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This study examines the effect of technology spillovers on firms' cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those have newer patents, are more profitable, face better growth opportunities and are associated with greater product market fluidity. The spillover impact remains strong when product market competition and own-firm innovations are accounted for. Overall, our study identifies technology spillovers as an important factor in determining corporate cash policy.Keywords: technology spillovers, product market competition, cash holdings JEL Classifications: G32, G35, L10 1 Qiu is from McMaster University. Wan is from University of Massachusetts Boston. We are grateful for the comments by Gerard Hoberg and Kai Li. We thank an anonymous referee for constructive comments. Qiu acknowledges financial support from the Social Science and Humanity Research Commission. Technology Spillovers and Corporate Cash Holdings AbstractThis study examines the effect of technology spillovers on firms' cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those have newer patents, are more profitable, face better growth opportunities and are associated with greater product market fluidity. The spillover impact remains strong when product market competition and own-firm innovations are accounted for. Overall, our study identifies technology spillovers as an important factor in determining corporate cash policy.

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Corporate Innovations and Mergers and Acquisitions

Cited by 84 publications

References 24 publications

The Incentives for Vertical Mergers and Vertical Integration

The Incentives for Vertical Mergers and Vertical Integration

Cash Holdings, Competition, and Innovation

Technology spillovers and corporate cash holdings

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