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Innovation Activities and Integration through Vertical Acquisitions

Year: 2019

Type: article

Abstract: We examine the determinants of vertical acquisitions using product text linked to product vocabulary from input-output tables. We find that the innovation stage is important in understanding vertical integration. R&D-intensive firms are less likely to become targets of vertical acquisitions. In contrast, firms with patented innovation are more likely to sell to vertically related buyers. Firms’ R&D intensity is a more important deterrent to their vertical acquisitions when the provision of innovation incentives by potential acquirers is more difficult. The role of patents in fostering vertical acquisitions is more prevalent when potential buyers face a higher risk of holdup. (JEL G32, G34, L22, L25, O34)

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhz106

Authors: Laurent Frésard, Gerard Hoberg, Gordon M Phillips

Institutions: Swiss Finance Institute, Università della Svizzera italiana, University of Southern California, Dartmouth College, National Bureau of Economic Research

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1517515495

FWCI: 21.55

Cites: 72

Cited by: 220

Related to: 10