Does patenting increase the probability of being acquired? Evidence from cross-border and domestic acquisitions
Authors:
- 1 October 2005
- journal article
- Published by Taylor & Francis in Applied Financial Economics
- Vol. 15 (14) , 1007-1017
Abstract
A firm that owns a patent has a legal right to exclude. Applying for the patent, however, discloses discovery of an invention by the firm. Both the ownership of the right and the disclosure of the discovery expose the firm to an acquisition, because other firms may be interested in buying the right or the invention for a number of reasons. This idea of patent-driven mergers and acquisitions (M&As) is tested using a large sample of Finnish firms that are mostly private and small. It is found that patenting by a Finnish firm is positively correlated with the probability that the firm is acquired by a foreign firm.Keywords
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