Ownership Structure and M&A Performance of High-Tech Companies

The largest companies consider world expansion as their priority because of globalization that is why mergers and acquisitions become an integral part of their strategy. Many studies believe high-tech industry to be the pioneer of the M&A market. The ownership structure has a significant impact on the performance of firms after mergers and acquisitions. This influence is explained by the fact that the ownership structure is closely related to the Agency conflicts: the conflict between managers and business owners, as well as the conflict between majority and minority investors. In this paper, we compare the impact of ownership structure on the efficiency of mergers and acquisitions of high-tech companies operating in countries with high and low level of development of the legal system. The study examined three thousand M&A deals that took place between 2009 and 2014, the largest share of these deals was in the United States, China, India and Malaysia. To analyze the effectiveness of M&A deals, the event method (calculation of cumulative abnormal return) and a panel regression were used. The following results were obtained: • Both at high and low levels of development of the legal system, the concentration of ownership has a negative impact on the efficiency of the firm due to the fact that it reduces the innovative activities of the company. • In countries with a highly developed legal system insiders have a positive impact on the performance of the high-tech company. However, in countries with a low level of development of the legal system, which are characterized by a high concentration of ownership in the hands of this group, this relationship is opposite. • Institutional owners have a positive effect on the activity of high-tech firms are contributing to innovation because they create a favorable environment for innovation.