Impact of Intellectual Property Rights on Activity of Cross-Border Mergers and Acquisitions

Ksenia  Zykova

doi:10.17323/j.jcfr.2073-0438.16.1.2022.14-37

Ksenia Zykova Lantmännen Unibake, Copenhagen, Denmark https://orcid.org/0000-0002-1237-0661

DOI: https://doi.org/10.17323/j.jcfr.2073-0438.16.1.2022.14-37

Keywords: Intellectual property rights, Cross-border mergers and acquisitions, Gravity model, International comparison

Abstract

We study the impact of the IPR (intellectual property rights) protection in the target and acquirer countries on the intensity of inbound cross-border M&As (mergers and acquisitions) in the target countries on a sample of 509,216 cross-border and domestic M&As in 64 developed and developing countries over 1985-2017. Our results show that better IPR protection in the target countries has a positive impact on M&A activity for the targets from the emerging and developed markets. We also find an inversed U-shaped relationship between the IPR protection in target countries and cross-border M&A activity at the post-TRIPS period after the global increase in IPR protection. Our results also show that developed acquires make less cross-border M&A deals when IPR protection improves in their own countries. The opposite happens when IPR protection improves in the countries of the emerging acquirers, which acquire the targets from the developed countries. IPR protection in the emerging targets motivates developed acquirers to make more international M&A deals, while the opposite happens when the developed acquirers would like to purchase targets from the developed markets.

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