Acquiring Innovation under Information Frictions

• 成果类型: Article
• 署名作者: Celik, Murat Alp; Tian, Xu; Wang, Wenyu
• 署名单位: University of Toronto; University System of Georgia; University of Georgia; Indiana University System; Indiana University Bloomington; IU Kelley School of Business
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac006
• 发表日期: 2022
• 页码: 4474
• 关键词: research-and-development; MERGER ACTIVITY; MARKET; exchange; GROWTH; incentives; valuation; benefits; bidders; COSTS

摘要

Acquiring innovation through M&A is subject to information frictions, as assessing the value of innovative targets is a challenging task. We find an inverted U-shaped relation between firm innovation and takeover exposure; equity usage increases with target innovation; and the deal completion rate drops with innovation. We develop and estimate a model of acquiring innovation under information frictions, featuring endogenous merger, innovation, and offer composition decisions. Our estimates suggest that acquirers' due diligence reveals only 30% of private information possessed by targets. Eliminating information frictions increases capitalized merger gains by 59%, stimulates innovation, and boosts productivity, business dynamism, and social welfare.