Cross-Border M&A and the Acquirers’ Innovation Performance: An Empirical Study in China

Abstract

This paper, firstly, empirically examines the relationship between Chinese companies' cross-border mergers and acquisitions and the acquirers' innovation performance. Secondly, it investigates the moderate effects of industrial policy and intellectual property protection on the relationship between cross-border M&A and the acquirers' innovation performance. At the same time, based on the perspective of corporate heterogeneity, the effect of state-owned equity on the above-mentioned moderate relationship was analyzed. The conclusions are as follows: First, Chinese companies' cross-border acquisitions have significantly improved the acquirers' innovation performance. Second, industrial policies negatively affect the relationship between cross-border mergers and acquisitions and the acquirers' innovation performance. Third, the moderating role of intellectual property protection is not stable. Fourth, state-owned equity negatively affects the relationship between cross-border M&A and the acquirers' innovation performance; the third-order interaction of state-owned equity on intellectual property protection, cross-border mergers and acquisitions, and the acquirers' innovation performance shows that the special relationship between state-owned enterprises and the government not only failed to help them make better use of intellectual property protection for technological innovation, it also adversely hindered the realization of its innovative performance.

Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

“…China provides the best case study for this analysis: First, M&A in China has been a significant contributor to the country's remarkable economic growth over the past four decades (Yang et al, 2019). The country has also become an essential source of global cross-border M&A (Zhang et al, 2018). The total Chinese outbound M&A in terms of deal value increased from 17 billion dollars to 147 billion dollars representing 765% increase between 2007 and 2017 (DealGlobe, 2018).…”

Analyzing the nexus between Chinese industrial policy and cross-border M&As

“…The idea that cross-border M&A decisions and outcomes are influenced by a variety of factors is widely recognized [ 15 – 21 ]. Economic considerations, cross-border M&As enable firms to acquire advanced technology and management experience [ 22 , 23 ], integrate resources to expand market share, and enhance competitiveness. In addition, the economy of scale effect can reduce enterprise costs.…”

Is the market biased in M&A, dividend payment, and share repurchase events?

“…According to Ref. [ 27 ], a company's growth potential, proprietary assets, firm size, and company age all have a favorable effect on the performance of the company following mergers and acquisitions. However, after mergers and acquisitions, corporate governance, ownership, and solvency have no bearing on a company's performance.…”