STOCK MARKET RESPONSE TO RESEARCH AND DEVELOPMENT EXPENDITURES OF THE FIRM IN THE CONTEXT OF MERGERS AND ACQUISITIONS, ACTA UNIVERSITATIS OULUENSIS G Oeconomica 50
|ISBN-13:||978-951-42-9343-6 || |
|Kustantaja:||Oulun yliopisto|| |
|Sijainti:||Print Tietotalo|| |
|Tekijät:||PYYKKÖ ELINA || |
This dissertation investigates the success of technology M&As. The research question isapproached through four separate empirical essays, each of which assesses a different butinterrelated issue of value creation of technology M&As. The approach used throughout thedissertation is to consider the motives of improving acquirer’s R&D activity through theacquisition of a technology firm and stress the role of the interaction between acquirer’s andtarget’s resources. The first two essays investigate the valuation consequences of M&As, whilethe following two essays examine pricing implications of M&As.
The results indicate that technology M&As are successful in enhancing the acquiring firm’sR&D activities to the extent that it manifests as an increase in the stock market valuation ofacquirer’s R&D spending and its higher future profitability. The results also demonstrate thatinvestors do not fully recognize these benefits at the announcement of M&A. Therefore investorsbenefit from technology M&As in the long run when these benefits begin to materialize.Furthermore, the results show that even when compared to other possible motives, enhancingacquirer’s R&D activities is an important and successful motive for M&As, emphasizing theabsorptive capacity of the acquiring firm in generating synergies from the combination of twofirms.
Overall, the findings of the dissertation provide more evidence on the success of mergers andacquisitions motivated by technology improvement. The thesis emphasizes the interactionbetween acquirer’s and target’s resources in creating synergies from M&As, with a focus ontechnological resources. The evidence also has important implications for the literature on thestock market valuation of R&D expenditures as it indicates that technology M&As can beconsidered an R&D investment with significant impacts on this activity.