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Aalto University School of Business Master's Theses are now in the Aaltodoc publication archive (Aalto University institutional repository)
School of Business | Department of Accounting | Accounting | 2016
Thesis number: 14311
Mergers and acquisitions effect on R&D and capital expenditures intensity in the financial crisis context - Evidence from Europe, 2002-2014
Author: Suolanen, Ari
Title: Mergers and acquisitions effect on R&D and capital expenditures intensity in the financial crisis context - Evidence from Europe, 2002-2014
Year: 2016  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; yrityskaupat; corporate acquisitions; investoinnit; investment; tutkimus ja kehitys; research and development; tuotekehitys; product development; rahoitus; financing; kriisi; crisis
Pages: 77
Key terms: mergers and acquisitions, research and development, capital expenditures, investments, financial crisis; investments; sijoitukset; research and development; tutkimus ja kehitys; growth; kasvu
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.
Master's theses are stored at Learning Centre in Otaniemi.