Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

M&A effects on innovation and profitability in large European firms

M&A effects on innovation and profitability in large European firms The purpose of this paper is to explore the effects of mergers and acquisitions (M&As) on innovation and profitability in large European firms.Design/methodology/approachUsing information from a unique micro-longitudinal database of top European R&D investors and information from the European Commission (EC) Merger Control Authority, dynamic panel estimations with firm-level fixed effects are performed. Moreover, the paper presents a qualitative case study of a merger in the European electronic and electrical equipment industry.FindingsThe analysis of a sample of 562 M&As authorized by the EC Merger Control Authority shows that mergers positively influence the R&D intensity and profitability of top companies in the European Union over the period 2004–2012. Furthermore, empirical evidence shows that the timing and magnitude of these effects differs. In particular, the positive effect of mergers on R&D intensity is found for the short and large term while they influence profitability only in the large term.Originality/valueThis paper makes several contributions. First, unlike other studies on this topic, it investigates the effects of M&As using firm-level panel data on the top 1,000 European R&D companies instead of only examining a case study. Second, a unique data set has been used, which collects information on large European firms from the European Industrial R&D Investment Scoreboard and the EC antitrust authority. Finally, the paper accounts for the casual link between innovation effort and profitability when evaluating the potential effect of M&As on the R&D intensity and profitability of large European firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

M&A effects on innovation and profitability in large European firms

Loading next page...
 
/lp/emerald-publishing/m-a-effects-on-innovation-and-profitability-in-large-european-firms-T3yQ1g73hC
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0025-1747
DOI
10.1108/md-08-2017-0730
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to explore the effects of mergers and acquisitions (M&As) on innovation and profitability in large European firms.Design/methodology/approachUsing information from a unique micro-longitudinal database of top European R&D investors and information from the European Commission (EC) Merger Control Authority, dynamic panel estimations with firm-level fixed effects are performed. Moreover, the paper presents a qualitative case study of a merger in the European electronic and electrical equipment industry.FindingsThe analysis of a sample of 562 M&As authorized by the EC Merger Control Authority shows that mergers positively influence the R&D intensity and profitability of top companies in the European Union over the period 2004–2012. Furthermore, empirical evidence shows that the timing and magnitude of these effects differs. In particular, the positive effect of mergers on R&D intensity is found for the short and large term while they influence profitability only in the large term.Originality/valueThis paper makes several contributions. First, unlike other studies on this topic, it investigates the effects of M&As using firm-level panel data on the top 1,000 European R&D companies instead of only examining a case study. Second, a unique data set has been used, which collects information on large European firms from the European Industrial R&D Investment Scoreboard and the EC antitrust authority. Finally, the paper accounts for the casual link between innovation effort and profitability when evaluating the potential effect of M&As on the R&D intensity and profitability of large European firms.

Journal

Management DecisionEmerald Publishing

Published: Jan 8, 2019

Keywords: Innovation; Europe; Mergers and acquisitions; Profitability; R&D

References