Mergers and Acquisitions, Synergy, and Corporate Innovation: Evidence from China

ABSTRACT

Mergers and acquisitions (M&As) and innovation as essential business development strategies have attracted much interest in the capital market. A difference-in-differences model employing Chinese listed firms indicates that M&As significantly enhance corporate innovation. The potential mechanisms lie in the fact that M&As generate synergy in finance, corporate governance, and information. Complementary evidence shows that the M&A effect on innovation is heterogeneous across payment methods and goodwill. We conclude that synergies obtained from combining and restructuring are important drivers of innovation capabilities.

KEYWORDS:

• Mergers and acquisitions
• corporate innovation
• synergy
• goodwill

JEL:

• G30
• G34
• O32

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Beijing Social Science Fund [No. 22JCC066].