Does patenting increase the probability of being acquired? Evidence from cross-border and domestic acquisitions

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACT: A firm that owns a patent has a legal right to exclude. Applying for the patent, however, discloses discovery of an invention by the firm. Both the ownership of the right and the disclosure of the discovery expose the firm to an acquisition, because other firms may be interested in buying the right or the invention for a number of reasons. In this paper we put forward the idea of patentdriven mergers and acquisitions (M&As). We test the idea using a large sample of Finnish firms that are mostly small and private. Multinomial logit estimations show that if a Finnish firm owns a number of patents registered via the European Patent Office (EPO), the patents increase the probability that the firm is acquired by a foreign firm. The same does not hold for the probability that the firm is acquired by a Finnish firm. The finding suggests that patenting via the EPO exposes Finnish firms to cross-border M&As. We relate the finding to the existing explanations for the M&A-activity and argue that it speaks for the notion that M&As serve many different economic roles. TIIVISTELMÄ: Hakemalla patentin yritys saa keksintöönsä yksinoikeuden. Sen vastapainoksi yritys joutuu paljastamaan ja julkistamaan keksintönsä sisällön. Molemmat tekijät -patentin omistaminen ja keksinnön julkistaminen -saattavat aiheuttaa sen, että muut yritykset kiinnostuvat ostamaan patentin omistavan yrityksen. Käyttämällä pääosin pienistä ja keskisuurista yrityksistä koostuvaa suomalaista aineistoa tässä tutkimuksessa selvitetään, missä määrin (potentiaalisen kohdeyrityksen) patentointi vaikuttaa yrityskaupan toteutumiseen. Tulosten mukaan EPO-patenttien (European Patent Office) määrä lisää todennäköisyyttä, että suomalainen yritys päätyy ulkomaisen yrityksen ostamaksi. Patentit eivät kuitenkaan näytä lisäävän todennäköisyyttä, että yritys päätyy suomalaisen yrityksen ostamaksi. Tulokset vahvistavat aiempaa käsitystä, että ulkomaiset yritykset ovat kiinnostuneita suomalaisyritysten teknologisesta osaamisesta. Terms of use: Documents in KEY WORDS:

What Drives Acquisitions in the EU Banking Industry? The Role of Bank Regulation and Supervision Framework, Bank Specific and Market Specific Factors

“…Pooling of sample across years in effect assumes that the determinants of acquisitions remain stable over time. However, previous studies that examine sub‐samples find acquisition characteristics to change over different periods (Harris et al, 1982; Powell, 1997; Ali‐Yrkko et al, 2005). In order to determine whether our estimates are consistent over time, we performed re‐estimations by splitting the full sample according into three sub‐periods of acquisition activity (1997‐98, 1999‐00, 2001‐02).…”

“…Many previous studies have followed a matched paired technique (e.g., Powell, 1997; Ali‐Yrkko et al, 2005), where a sample of non‐acquired firms is usually drawn by matching against the sample of acquired firms on the basis of company size, industry sector, and/or year of acquisition. While the advantage of this sampling procedure is that it helps to reduce the cost of data collection, a matched sample is limited in permitting investigation of the effects of industry sector differences.…”

“…While there are numerous empirical studies investigating the relationship between financial characteristics and acquisition likelihood of industrial (i.e., non‐financial) firms (e.g., Levine and Aaronovitch, 1981; Harris et al, 1982; Hasbrouck, 1985; Ambrose and Megginson, 1992; Powell, 1997; Gonzalez et al, 1997; Ali‐Yrkko et al, 2005), investigation of such characteristics for the banking industry has been limited (Cyree et al, 2000; Wheelock and Wilson, 2000). Furthermore, previous studies on bank acquisitions have traditionally focused on examining the financial characteristics of US banks (Hannan and Rhoades, 1987; Meric et al, 1991; Moore, 1996; Wheelock and Wilson, 2000, 2004; Hannan and Pilloff, 2009), while there have been relatively few studies for the EU countries.…”

Network Positions and the Probability of Being Acquired: An Empirical Analysis in the Biopharmaceutical Industry

“…S. Kamuriwo Figure 2. Number of acquisitions in the observed period (2001-2010) represent valuable assets that other firms may be interested in capturing through an acquisition (Ali-Yrkkö, Hyytinen and Pajarinen, 2005). Thus, patents are positively related to acquisition probabilities (Long, 2002).…”

“…Indeed, literature is quite unanimous in considering patents as a signal of quality for technology firms (Baum and Silverman, 2004;Ziedonis, 2008, 2013). Patents (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010) represent valuable assets that other firms may be interested in capturing through an acquisition (Ali-Yrkkö, Hyytinen and Pajarinen, 2005). Thus, patents are positively related to acquisition probabilities (Long, 2002).…”