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

ABSTRACTMergers 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 acquisitionscorporate innovationsynergygoodwillJEL: G30G34O32 Disclosure StatementNo potential conflict of interest was reported by the author(s).Additional informationFundingThis work was supported by the Beijing Social Science Fund [No. 22JCC066].