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Title: R&D investment as a signal in corporate takeovers
Authors: Socorro Quevedo, María Del Pilar 
UNESCO Clasification: 5311 Organización y dirección de empresas
Keywords: Dirección de empresas
Issue Date: 2009
Journal: Managerial and Decision Economics 
Abstract: The purpose of this paper is to analyze the effects that takeover threats have on firms' preacquisition R&D intensity. Critics of takeovers usually argue that takeover threats may reduce target firms' R&D investments. However, I find that target firms may increase R&D investment in order to signal their compatibility with the acquiring firm. The identity of the acquired firm depends on the market size and target firms' efficiency and compatibility. Through R&D investments, target firms may affect this result, signaling potential outsiders the kind of competition they may face, and forcing them to accept lower takeover offers.
ISSN: 0143-6570
DOI: 10.1002/mde.1456
Source: Managerial And Decision Economics[ISSN 0143-6570],v. 30 (5), p. 335-350, (Julio 2009)
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