M&A goodwill and corporate technological innovation: The mediating moderating effect of stock pledges

Abstract

Identifying whether and how merger and acquisition (M&A) goodwill influences corporate technology innovation is a critical topic in the context of growing M&A activities. Based on the panel data of 2,634 Chinese non-financial listed companies from 2007 to 2019, this paper adopts multiple linear regression and the Bootstrap method to investigate the impact of M&A goodwill on corporate technological innovation and the mechanism through which M&A goodwill affects technological innovation. The results show that: (1) There is a significant negative correlation between M&A goodwill and technological innovation input, with financial constraints acting as the main channels. (2) Non-private corporations enjoy a higher level of financing capacity in terms of debt and equity compared with private corporations, resulting in the absence of the disincentive effect of M&A goodwill on corporate technological innovation inputs, despite the fact that M&A activities also cause massive resource consumption. (3) Stock pledges by controlling shareholders are effective in alleviating the negative impact of M&A goodwill on technological innovation inputs. Furthermore, our results highlight that simple stock pledge measures capture a significant influence of alleviating financing constraints, thereby decreasing the adverse impact of M&A, and hence need to be adequately considered in future M&A and innovation studies. While enriching the literature on the economic consequences of M&A and the research on stock pledge, this paper also provides micro-evidence for an in-depth understanding of the effect of M&A goodwill on technological innovation.

Cross-border mergers and acquisitions in manufacturing sector in the European area

“…The last significant conclusion we reached is that the influence of the absolute member of the model (Intercept) with a significance level of p =0.000249 points to the fact that there are other significant influences that affect the conditional value of cross-border mergers and acquisitions which was not considered within this contribution. In this context, it would be appropriate to verify with further research whether and what effect goodwill has on M&As in the manufacturing sector, as investigated by Zhang et al (2022). However, their research was only carried out in Chinese manufacturing enterprises.…”

“…Mergers and acquisitions (M&As) simply refer to the coming together of two or more enterprises into a single entity. It is an effective way to sustain growth in performance (Zhang et al, 2022) and socio-economic conditions (Stefko et al, 2022a). They play an important role in companies' growth and competitiveness.…”