Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19674
Authors: 
Frey, Rainer
Hussinger, Katrin
Year of Publication: 
2006
Series/Report no.: 
Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank 2006,45
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 limited companies 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 crossborder M&As further illustrates the international character of technology markets.
Subjects: 
domestic versus cross-border M&As
technological relatedness
market relatedness
JEL: 
O32
O34
G34
C25
Document Type: 
Working Paper

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