Cross-Border Mergers and Acquisitions for Innovation

Abstract

We empirically examine if firms initiate cross-border mergers and acquisitions (M&As) to pursue overseas innovation opportunities. Our deal-level evidence suggests that innovative firms in low innovation countries are more likely to undertake cross-border deals and target innovative targets when doing so in comparison with innovative firms in high innovation countries. Moreover, we find that these cross-border M&As earn higher announcement stock returns from these deals when compared to domestic deals. Our empirical evidence suggests that the acquisition of innovation is an important and value-enhancing driver of cross-border takeovers.