Impact of Intellectual Property Rights on Activity of Cross-Border Mergers and Acquisitions (K. Zykova, сетевое издание "Электронный журнал "Корпоративные финансы" Journal of Corporate Finance Research", N 1, 2022 г.)

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

K. Zykova - Commercial Business Controller, Lantmannen Unibake, Copenhagen, Denmark

We studied 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 discovered 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 acquirers from developed countries make fewer 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, who acquire targets from developed countries. IPR protection in the emerging targets motivates developed acquirers to make more international M&A deals, while the opposite happens when developed acquirers seek to purchase targets from developed markets.

Keywords: intellectual property rights, cross-border mergers and acquisitions, gravity model, international comparison, world economy