M&As and Innovation: Empirical Evidence from Acquiring Public versus Private Targets

We examine the impact of acquiring public versus private targets on acquirers’ long-run innovation outcomes. Our analysis shows that acquisitions of private targets are associated with an increase in innovation outcomes and innovation efficiency. We do not find an impact on innovation for public targets. These differences in innova- tion effects between private versus public targets is also reflected in announcement returns. Our results highlight the importance of private targets for innovation in the M&A market and the fact that the announcement market reaction accounts for this difference.