B1818
Title: The impact of M\&As on financial innovation
Authors: Jennifer Zou - Harvard University (United States) [presenting]
Abstract: There has been significant merger and acquisition activity in financial services in recent decades. The vast amount of the literature has focused on the banking industry, with an emphasis on market concentration and the provision of services. The technological factors that motivate such collaborative efforts (versus other methods, such as strategic alliances) as well as the impact of these acquisitions on subsequent innovation have been much more poorly understood. The purpose is to seek answers to these questions by leveraging a novel panel dataset of firm activity and patent output as well as a combination of natural language processing (NLP) and machine learning (ML) tools. It is found that M\&A activity has a small but significant negative effect on innovation for the merged entity; these results are robust to a number of specifications, including those that control for technological similarities and the endogeneity of acquisition.
