Abstract
The aim of this paper is to analyze, over the period 1999 to 2014, the impact of acquisitions on firm growth for software firms located in Catalonia. We investigate firms that targeted, or are themselves the target of, an acquisition. Applying a matching procedure, we obtain a database of more than 800 firms. Estimates from a fixed effects quantile model show that the effects of acquisitions are heterogeneous—the acquired companies increase their productivity growth, while the acquiring companies significantly increase their sales growth. Among the high-growth firms, the acquiring firms have a 60.8% higher sales growth rate than the control group. The impact of acquisitions is greatest in the upper percentiles of the conditional growth distribution.
Notes
Cefis et al. (2009) show that acquisitions lead to a departure from lognormality of the firm size distribution.
The 22@ district is an innovative district located in Barcelona that was developed by Barcelona City Council in 2000, which aimed to attract high-tech and knowledge intensive firms. This has been a successful policy that has attracted many high-tech firms and knowledge-based activities to the area.
Idescat (Institut d’Estadística de Catalunya), Companies and employment of the ICT sector. Catalonia. 2015.
INE (Instituto Nacional de Estadística), Sector ICT Indicators, ed. 2015. INE (Instituto Nacional de Estadística), Sector ICT indicators
Idescat, Companies and employment of the ICT sector
See Annex Table A2. for correlations between variables.
In a fixed effects model, the inclusion of the lagged dependent variable may lead to biased estimates. According to Nickell (1981), when the time period is small, the standard fixed effects estimator provides biased and inconsistent results due to the induced correlation between the lagged dependent variable and both the idiosyncratic and the individual specific error term. Following the suggestion of a referee, we have run quantile regressions to observe the deviations from our parameters. The results are almost the same, with some changes in the significance of the variables (some coefficients are less significant, but some others are even more significant). For brevity, these have not been incorporated in the paper but are available on request to the authors.
NACE Rev.2: European Classification of Economic Activities.
Initially, we compiled 879 software firms from the region of Catalonia (NUTS 2 level) from the SABI for 15 years obtaining 14,943 observations. After some filtering, we discarded 8225 observations with missing data in order to obtain a final dataset of 6718 observations (retaining the 879 software firms).
We use the IPC (English: Price Consumption Index, PCI), Base 1999 (=100) as a deflator.
Due to the nature of the database, we cannot differentiate between partial or total acquisitions.
See Table A1 in the Appendix for additional statistics of the variables.
To check the impact of these variables on dependent variables across quantiles, see Annex, Figure A3.
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Acknowledgments
This paper is part of the investigations carried out with the financial support of the Consolidated Research Groups 2014–SGR–1395 and 2017-SGR-159 of the Catalan Government, the Xarxa de Referència d’Economia Aplicada (XREAP), the Xarxa de Referència d’R + D + I en Economia i Polítiques Públiques (XREPP) and the competitive projects ECO2015-68061-R “Gender Diversity as a Determinant of Innovation: An Analysis of the Impact of Gender Diversity on Firm Innovation” and ECO2017-88888-P ““Clusterization“, terciarization and relocation: emerging questions in the location of economic activities (RE)LOCATION” funded by the Ministry of Economics and Competitiveness Spanish Government and by European funds from FEDER. We are grateful for the comments recieved at 21st Applied Economics Meeting in Alcalá de Henares (Spain) and 4th KIIS Workshop in Valencia (Spain). We also would like to thank the anonymous referee for his valuable comments and the editor for all the support provided during the editorial process. The usual disclaimers apply.
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Méndez-Ortega, C., Teruel, M. To acquire or not to acquire: the effects of acquisitions in the software industry. J Evol Econ 30, 793–814 (2020). https://doi.org/10.1007/s00191-020-00670-y
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DOI: https://doi.org/10.1007/s00191-020-00670-y