Do Intellectual Property Rights Influence Cross-Border Mergers and Acquisitions?

Abstract

This paper analyses whether the strengthening of intellectual property rights (IPRs) systems affects decisions of cross-border mergers and acquisitions (M&As), and if their influence is different for developed and developing countries, and across industrial sectors. We estimate an extended gravity model to study bilateral number of M&As using data for the post-TRIPS period (1995-2010) and two different indexes that measure the strength of IPRs systems at the country level. We find that IPRs influence decisions of cross-border M&As in all the sectors of different technological content. Furthermore, a strengthening of IPRs leads to a larger increase of M&As in developing countries than in developed countries. This calls the attention on the possible implications for least developed economies.

Keywords: Intellectual Property Rights, Mergers and Acquisitions, Technological Intensity, Gravity Model

JEL Classification: O34, G34, O13, O14