Cai, Xiangshang and De Cesari, Amedeo and Gao, Ning and Peng, Ni (2022) Acquisitions and Technology Value Revision. Management Science. (In Press)
Cai, Xiangshang and De Cesari, Amedeo and Gao, Ning and Peng, Ni (2022) Acquisitions and Technology Value Revision. Management Science. (In Press)
Cai, Xiangshang and De Cesari, Amedeo and Gao, Ning and Peng, Ni (2022) Acquisitions and Technology Value Revision. Management Science. (In Press)
Abstract
Acquisition announcements coincide with upward value revisions for the target firms’ technology peers, which are not due to economic relations based on product market, supply chain, or geo-graphical location. Such a phenomenon is robust across sub-sample periods, not specific to merger or technology waves, and not related to product-market structure and the unique innovation features of certain technology-intensive industries. Firms experience more dramatic value revisions when they have deeper technology overlaps with their targets, are more dependent on technology, or when a transaction features higher premium or greater technology overlap between the acquirer and target. Our mechanism analysis provides evidence that is primarily consistent with the Acquisition-Probability Hypothesis whereby acquisition announcements elevate expected technology synergies and merger prospects for peers; and partially in line with the Enhanced-Investment Hypothesis that peers’ revaluations correlate with increased technology investments. We do not find any evidence in line with the Competition-Balance Hypothesis which attributes peers’ value revisions to the change in industrial competition intensity. Overall, our results demonstrate that acquisition announcements disseminate novel information about the value of technology that is of common interest among firms with close technologies.
Item Type: | Article |
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Uncontrolled Keywords: | information transmission; innovation; mergers and acquisitions; technology peer; valuation |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 20 Oct 2022 13:49 |
Last Modified: | 16 May 2024 21:30 |
URI: | http://repository.essex.ac.uk/id/eprint/33713 |
Available files
Filename: Acquisitions&TechnologyValuation_Combined_4Production.pdf