The crowding-out effects of innovation information disclosure on peers' innovation: Evidence from innovation-driven M&As in China

Zhangfan Cao; Chen Hua; Yan Tong; Xi Wang

doi:10.1111/acfi.13165

The crowding-out effects of innovation information disclosure on peers' innovation: Evidence from innovation-driven M&As in China

Zhangfan Cao, Chen Hua^*, Yan Tong, Xi Wang

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

This study investigates the impact of rivals' announcements of innovation-driven mergers and acquisitions (M&As) on focal firms' ex-post corporate innovation performance. Exploiting a hand-collected dataset of Chinese listed firms from 2011 to 2018, we find that focal firms file fewer patents after rivals' announcements of innovation-driven M&As. Further analyses show that focal firms become more conservative and hold more cash when rivals intend to obtain innovation resources through M&As. We find that such crowding-out effects are more pronounced for focal firms that are more financially constrained, those facing higher competition, those whose rivals are industry leaders, and those operating in traditional industries.

Original language	English
Pages (from-to)	4883-4908
Number of pages	26
Journal	Accounting and Finance
Volume	63
Issue number	5
DOIs	https://doi.org/10.1111/acfi.13165
Publication status	Published - Dec 2023

Keywords

corporate innovation
crowding-out effect
innovation information disclosure
innovation-driven M&A
technological M&A

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10.1111/acfi.13165

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title = "The crowding-out effects of innovation information disclosure on peers' innovation: Evidence from innovation-driven M&As in China",

abstract = "This study investigates the impact of rivals' announcements of innovation-driven mergers and acquisitions (M&As) on focal firms' ex-post corporate innovation performance. Exploiting a hand-collected dataset of Chinese listed firms from 2011 to 2018, we find that focal firms file fewer patents after rivals' announcements of innovation-driven M&As. Further analyses show that focal firms become more conservative and hold more cash when rivals intend to obtain innovation resources through M&As. We find that such crowding-out effects are more pronounced for focal firms that are more financially constrained, those facing higher competition, those whose rivals are industry leaders, and those operating in traditional industries.",

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AU - Wang, Xi

PY - 2023/12

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N2 - This study investigates the impact of rivals' announcements of innovation-driven mergers and acquisitions (M&As) on focal firms' ex-post corporate innovation performance. Exploiting a hand-collected dataset of Chinese listed firms from 2011 to 2018, we find that focal firms file fewer patents after rivals' announcements of innovation-driven M&As. Further analyses show that focal firms become more conservative and hold more cash when rivals intend to obtain innovation resources through M&As. We find that such crowding-out effects are more pronounced for focal firms that are more financially constrained, those facing higher competition, those whose rivals are industry leaders, and those operating in traditional industries.

AB - This study investigates the impact of rivals' announcements of innovation-driven mergers and acquisitions (M&As) on focal firms' ex-post corporate innovation performance. Exploiting a hand-collected dataset of Chinese listed firms from 2011 to 2018, we find that focal firms file fewer patents after rivals' announcements of innovation-driven M&As. Further analyses show that focal firms become more conservative and hold more cash when rivals intend to obtain innovation resources through M&As. We find that such crowding-out effects are more pronounced for focal firms that are more financially constrained, those facing higher competition, those whose rivals are industry leaders, and those operating in traditional industries.

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The crowding-out effects of innovation information disclosure on peers' innovation: Evidence from innovation-driven M&As in China

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