Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/24524 
Year of Publication: 
2006
Series/Report no.: 
ZEW Discussion Papers No. 06-069
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
Technological change is often hypothesized as one of the main drivers of merger activities. This paper analyzes the role of technology in mergers and acquisitions (M&As) at the firm level. Based on a newly created data set that combines financial information and patent data for public firms in Europe as well as country level variables, we apply a structural model to investigate technology-related motivations behind merger formation. Distinguishing between cross-border and domestic M&As, we find that technological relatedness of the M&A partners reduces uncertainty and the expected risk of failure associated with cross-border acquisitions significantly, whereas there is no evidence for technological complementarities driving domestic M&As. The relevance of technology for cross-border M&As further illustrates the international character of technology markets.
Subjects: 
domestic versus cross-border M&As
technological relatedness
market relatedness
JEL: 
O34
O32
C25
G34
Document Type: 
Working Paper

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