Abstract
We perform an event study on 2824 cases of domestic mergers and acquisitions (M&A) that were disclosed in the Korean domestic stock exchange and took effect between 2002 and 2015. We focus on Korean capital markets to define the factor variables affecting the disclosure effect of M&A in high-tech industries and the effect of disclosure on long-term performance. We find the following. First, the disclosure effect of M&A benefits acquirers’ shareholder wealth; this effect is more pronounced for high-tech firms than for non-high-tech firms. Second, M&A of high- and non-high-tech firms harm acquirers’ shareholder wealth via the disclosure effect. Finally, M&A between high- and non-high-tech firms negatively affect long-term firm performance. However, acquirers that are mature high-tech firms have a positive effect on long-term performance. This result affirms that organizationally mature firms adapt better to highly specialized technologies and knowledge that are not yet internalized as corporate routines owing to their learned capabilities and breadth of experience. This study provides a significant novel perspective on high-tech M&A by emphasizing the financial performance of firms involved in them.
Highlights
Performance of High-TechIt is virtually impossible for high-tech industries—which rely heavily on innovation and complex and specialized technologies—to build every capacity they need for growth and innovation on their own in today’s fast-paced business climate
We conduct an event study on 2824 cases of domestic mergers and acquisitions (M&A) that were disclosed in the domestic stock exchange and took effect between 2002 and 2015 in Korean capital markets by classifying high-tech sectors into biotechnology, telecommunications, computer equipment, electronics, and general technology groups
The disclosure effect of domestic M&A in Korean capital markets has a positive impact on the acquirer’s shareholder wealth; this effect is more pronounced for high-tech firms than for non-high-tech firms
Summary
It is virtually impossible for high-tech industries—which rely heavily on innovation and complex and specialized technologies—to build every capacity they need for growth and innovation on their own in today’s fast-paced business climate. Major economies compete intensely to formulate policies conducive to cutting-edge industries. Such strategies are expected to create high value added through initiatives such as the “High-Tech Strategy. 2020” launched by Germany in 2010, “National Strategic Plan for Advanced Manufacturing” launched by the United States in 2012, “Manufacturing Reform 3.0” launched by the Republic of Korea in 2014, and “Made in China 2025” launched by China in 2015. Definitions of “high-tech sector” differ across countries, but the term typically refers to an industry based on highly advanced technologies. “highly advanced technologies” is a subjective notion, and its definition and subcategories may vary by era and situation.
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