What Causes the M&A Performance of High-Tech Firms?

We perform an event study on 2824 cases of domestic mergers and acquisitions (M&A) that were disclosed in the Korean domestic stock exchange and took effect between 2002 and 2015. We focus on Korean capital markets to define the factor variables affecting the disclosure effect of M&A in high-tech industries and the effect of disclosure on long-term performance. We find the following. First, the disclosure effect of M&A benefits acquirers’ shareholder wealth; this effect is more pronounced for high-tech firms than for non-high-tech firms. Second, M&A of high- and non-high-tech firms harm acquirers’ shareholder wealth via the disclosure effect. Finally, M&A between high- and non-high-tech firms negatively affect long-term firm performance. However, acquirers that are mature high-tech firms have a positive effect on long-term performance. This result affirms that organizationally mature firms adapt better to highly specialized technologies and knowledge that are not yet internalized as corporate routines owing to their learned capabilities and breadth of experience. This study provides a significant novel perspective on high-tech M&A by emphasizing the financial performance of firms involved in them.