Mahdiyeh Entezarkheir | Huron University College (original) (raw)

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Papers by Mahdiyeh Entezarkheir

Merger activities in innovative industries point to a relation between mergers and innovation. Fi... more Merger activities in innovative industries point to a relation between mergers and innovation. Firms' innovative ideas may spillover to other firms dis-incentivizing innovation activities, and merger may be a way to capture innovation spillover. The merger-innovation nexus has been well studied in the theoretical literature and recently in empirical papers, but empirical evidence on merger and innovation spillover is limited. In this paper, we investigate the impact of innovation spillovers on the likelihood of firms to merge, using a panel data set of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003. In our empirical model, we also control for business cycles and proxies of neoclassical, behavioural and Q theories of mergers. Innovation is measured using R&D investments and citation-weighted patents, and innovation spillover is proxied using the technological proximity of firms. As a source of R&D spillover (outward spillover), a firm can internalize its spillover effects by acquiring targets that benefit from the spillover. As a receiver of an R&D spillover (inward spillover), a firm may want to merge to control the negative impact of others' innovation on its competitive edge. We find that innovative firms are on average more likely to merge. These findings are robust to using a measure of patent ownership fragmentation as our instrumental variable. Our results also show that within-industry inward R&D spillovers increase mergers, but between-industry inward R&D spillovers do not influence merger decisions significantly. Our main results are robust to alternative measures of spillovers and different estimation methods.

Econometric analyses widely use the listwise deletion approach-which is also called the complete ... more Econometric analyses widely use the listwise deletion approach-which is also called the complete case method-and the indicator approach for models with censored re-gressors and regressors with missing observations. Nevertheless, the existing literature provides few studies which examine the statistical properties of these methods and they suggest the listwise deletion method generates smaller bias than the indicator method. Using the Monte Carlo simulations this study shows sometimes the listwise deletion estimates have larger bias than the indicator estimates when missingness on a regressor is correlated with unobserved error terms and the value of the regressor. These conditions indicate that greater care is warranted in interpreting the estimates under each approach than the existing literature and the applications which generally employ these methods.

The impact of innovation on mergers has been a source of debate in merger enforce-ments. Innovati... more The impact of innovation on mergers has been a source of debate in merger enforce-ments. Innovative firms influence market structure by changing merger decisions, as mergers provide resources for commercialization of innovation and capturing knowledge spillovers. However, there is a limited empirical evidence on the innovation induced changes of merger likelihood. We construct panel data of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003 and investigate the impact of innovation , measured by a citation weighted patent stock, on merger decisions controlling for business cycles and proxies of neoclassical, behavioural, and Q theories of mergers. We find that innovations are positively and significantly correlated with firms' merger likelihood, and these decisions are procyclical. The positive impact of weighted patent stocks on merger decision is robust to the mixed model estimation method, and innovation effects on merger decisions vary across industries.

Mergers lead to larger firms and a less competitive market structure, but their effects on innova... more Mergers lead to larger firms and a less competitive market structure, but their effects on innovation are not clear. Mergers may improve innovation incentives by promoting economies of scope and scale, R&D activities, and increasing the ability to deal with uncertainties. However, mergers may also discourage innovation by reducing competition, increasing costs, and decreasing production and R&D efficiencies. In this study, we investigate merger impacts on innovation using a panel data consisting of four different data sets on publicly traded US manufacturing firms from 1980 to 2003. Our proxy for innovation is based on citation-weighted patent stocks. In our estimation model, we control for endogeneity using instrumental variables and factors such as market share, size, industry, and time. We find that mergers are positively and significantly correlated with firms' innovation. Our findings also indicate that merger effect on innovation is heterogeneous across industries, increases with market share, and is greater in the long run. Our findings are robust to alternative measures of innovation.

JEL Classification: L10; L22; L40; O34 Improving shareholder value has often been cited as a merg... more JEL Classification: L10; L22; L40; O34 Improving shareholder value has often been cited as a merger determinant. Because mergers create larger firms and less competition, they may increase shareholder value through higher market share and stock-market value. We investigate merger impacts on firms' stock-market value and market share. We construct panel data from 4 different data sources on public merging and non-merging U.S. manufacturing firms for 1980-2003. Instrumental variables and factors such as R&D, patents, and citations control for endogeneity. We find that mergers are positively correlated with stock-market value and market share.

Patent thickets are sets of overlapping intellectual property rights that occur in fragmented tec... more Patent thickets are sets of overlapping intellectual property rights that occur in fragmented technology markets. Their potential impacts on innovation have become an increasing concern in recent years. I estimate the direct and indirect effects of patent thickets on market value of publicly traded manufacturing firms. I find that patent thickets decrease the market value of firms, holding R&D and patenting activities of these firms constant. I also find that while firms do not change their R&D activities in response to patent thickets, they do reduce negative cost effects of patent thickets on market value through defensive patenting.

Patent ownership Fragmentation following the U.S. pro-patent shifts has built overlapping intelle... more Patent ownership Fragmentation following the U.S. pro-patent shifts has built overlapping intellectual property rights or patent thickets. This has made the use of others' innovations costlier, due to transaction costs, licensing fees, and hold-up. Using panel data on 2,441 public U.S. manufacturing firms for 1976-2002, I find that patent thickets lower firms' expected profit and their market value. I also find that firms with a large patent portfolio experience a smaller effect, likely because stronger bargaining position lowers the hold-up likelihood. There is no systematic time effect from patent thickets on firms' market value with a large patent portfolio size.

Health policy, Jan 1, 2010

Iranian economic review, Jan 1, 2006

Merger activities in innovative industries point to a relation between mergers and innovation. Fi... more Merger activities in innovative industries point to a relation between mergers and innovation. Firms' innovative ideas may spillover to other firms dis-incentivizing innovation activities, and merger may be a way to capture innovation spillover. The merger-innovation nexus has been well studied in the theoretical literature and recently in empirical papers, but empirical evidence on merger and innovation spillover is limited. In this paper, we investigate the impact of innovation spillovers on the likelihood of firms to merge, using a panel data set of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003. In our empirical model, we also control for business cycles and proxies of neoclassical, behavioural and Q theories of mergers. Innovation is measured using R&D investments and citation-weighted patents, and innovation spillover is proxied using the technological proximity of firms. As a source of R&D spillover (outward spillover), a firm can internalize its spillover effects by acquiring targets that benefit from the spillover. As a receiver of an R&D spillover (inward spillover), a firm may want to merge to control the negative impact of others' innovation on its competitive edge. We find that innovative firms are on average more likely to merge. These findings are robust to using a measure of patent ownership fragmentation as our instrumental variable. Our results also show that within-industry inward R&D spillovers increase mergers, but between-industry inward R&D spillovers do not influence merger decisions significantly. Our main results are robust to alternative measures of spillovers and different estimation methods.

Econometric analyses widely use the listwise deletion approach-which is also called the complete ... more Econometric analyses widely use the listwise deletion approach-which is also called the complete case method-and the indicator approach for models with censored re-gressors and regressors with missing observations. Nevertheless, the existing literature provides few studies which examine the statistical properties of these methods and they suggest the listwise deletion method generates smaller bias than the indicator method. Using the Monte Carlo simulations this study shows sometimes the listwise deletion estimates have larger bias than the indicator estimates when missingness on a regressor is correlated with unobserved error terms and the value of the regressor. These conditions indicate that greater care is warranted in interpreting the estimates under each approach than the existing literature and the applications which generally employ these methods.

The impact of innovation on mergers has been a source of debate in merger enforce-ments. Innovati... more The impact of innovation on mergers has been a source of debate in merger enforce-ments. Innovative firms influence market structure by changing merger decisions, as mergers provide resources for commercialization of innovation and capturing knowledge spillovers. However, there is a limited empirical evidence on the innovation induced changes of merger likelihood. We construct panel data of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003 and investigate the impact of innovation , measured by a citation weighted patent stock, on merger decisions controlling for business cycles and proxies of neoclassical, behavioural, and Q theories of mergers. We find that innovations are positively and significantly correlated with firms' merger likelihood, and these decisions are procyclical. The positive impact of weighted patent stocks on merger decision is robust to the mixed model estimation method, and innovation effects on merger decisions vary across industries.

Mergers lead to larger firms and a less competitive market structure, but their effects on innova... more Mergers lead to larger firms and a less competitive market structure, but their effects on innovation are not clear. Mergers may improve innovation incentives by promoting economies of scope and scale, R&D activities, and increasing the ability to deal with uncertainties. However, mergers may also discourage innovation by reducing competition, increasing costs, and decreasing production and R&D efficiencies. In this study, we investigate merger impacts on innovation using a panel data consisting of four different data sets on publicly traded US manufacturing firms from 1980 to 2003. Our proxy for innovation is based on citation-weighted patent stocks. In our estimation model, we control for endogeneity using instrumental variables and factors such as market share, size, industry, and time. We find that mergers are positively and significantly correlated with firms' innovation. Our findings also indicate that merger effect on innovation is heterogeneous across industries, increases with market share, and is greater in the long run. Our findings are robust to alternative measures of innovation.

JEL Classification: L10; L22; L40; O34 Improving shareholder value has often been cited as a merg... more JEL Classification: L10; L22; L40; O34 Improving shareholder value has often been cited as a merger determinant. Because mergers create larger firms and less competition, they may increase shareholder value through higher market share and stock-market value. We investigate merger impacts on firms' stock-market value and market share. We construct panel data from 4 different data sources on public merging and non-merging U.S. manufacturing firms for 1980-2003. Instrumental variables and factors such as R&D, patents, and citations control for endogeneity. We find that mergers are positively correlated with stock-market value and market share.

Patent thickets are sets of overlapping intellectual property rights that occur in fragmented tec... more Patent thickets are sets of overlapping intellectual property rights that occur in fragmented technology markets. Their potential impacts on innovation have become an increasing concern in recent years. I estimate the direct and indirect effects of patent thickets on market value of publicly traded manufacturing firms. I find that patent thickets decrease the market value of firms, holding R&D and patenting activities of these firms constant. I also find that while firms do not change their R&D activities in response to patent thickets, they do reduce negative cost effects of patent thickets on market value through defensive patenting.

Patent ownership Fragmentation following the U.S. pro-patent shifts has built overlapping intelle... more Patent ownership Fragmentation following the U.S. pro-patent shifts has built overlapping intellectual property rights or patent thickets. This has made the use of others' innovations costlier, due to transaction costs, licensing fees, and hold-up. Using panel data on 2,441 public U.S. manufacturing firms for 1976-2002, I find that patent thickets lower firms' expected profit and their market value. I also find that firms with a large patent portfolio experience a smaller effect, likely because stronger bargaining position lowers the hold-up likelihood. There is no systematic time effect from patent thickets on firms' market value with a large patent portfolio size.

Health policy, Jan 1, 2010

Iranian economic review, Jan 1, 2006