Mergers and acquisitions effect on R&D and capital expenditures intensity in the financial crisis context - Evidence from Europe, 2002-2014

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School of Business | Master's thesis
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The purpose of this thesis is to research how M&A transactions affect R&D and CAPEX investments amount. Results in the prior literature regarding the subject are somewhat mixed and most of the studies are based on US data. I regress also how similarities between acquirer and target company affect the outcome of investment activity changes due to M&A deals. In addition, I investigate further whether financial crisis has had an impact on R&D and CAPEX investment changes in the M&A context. My test sample consists of transactions made between European publicly listed companies during pre-financial crisis period 2003-2005 and post-financial crisis period 2010-2012. I have also separate control sample including firms, which have not participated in M&A transactions, to test differences between test and control sample. Data of M&A transactions is gathered from SDC Platinum database and financial data of acquirers, targets and control group companies is obtained from Thomson ONE Banker and Orbis databases. In my analyses I have compared pre-transaction year values to one [-1, +1] and two [-1, +2] year post-transaction values. The data is analyzed by using comparison of means, t-tests, correlation and linear regression methods. Findings of my study indicate that M&A deals have had positive effect on R&D investments amount post-transaction. Result is against my hypothesis and prior results of e.g. Hitt et al. (1991), but somewhat consistent with Cassiman et al. (2005) findings. Furthermore, I do not find support that similarities regarding same home country or industry of acquirer or target would have significant impact on R&D investments development in the M&A context. According to my results, neither financial crisis has affected R&D activity. My results regarding CAPEX investments change due to M&A transactions are relatively similar as with R&D investments. First, I achieve mixed results whether M&A deals have had effect on CAPEX investments and thus my findings are close to Healy et al. (1992) results. Second, I do not find support that similarities would affect significantly CAPEX intensity's change. Finally, I discover only minor support for hypothesis that financial crisis would have had negative impact on capital expenditures change.
mergers and acquisitions, research and development, capital expenditures, investments, financial crisis, investments, sijoitukset, research and development, tutkimus ja kehitys, growth, kasvu
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