Firm Size, R&D Expenditures, and Abnormal Announcement Returns in Technology Mergers and Acquisitions

Abstract

Research on M&A in the technology sector suggests that shareholder gains are larger for large acquirers than for small acquirers, due to industry-specific dynamics involving R&D and size. Research on M&A across industries has shown that shareholder gains are significantly higher for small acquirers than for large acquirers. This general trend is known as the “size effect.” I analyze a sample of 1,266 technology-oriented acquisitions of public companies from 1984 to 2019. My results have several implications for the interactions between firm size and R&D in technology M&A and motivate future research focused on this topic.