Scale Versus Technology-M&A Effects by Firm Size and Ex-Post M&A Time Horizon in Korea

초록

This study aims to examine the effects of mergers and acquisitions (M&A) on technical change (TC) and the scale component (SC)-the two primary constituents of total factor productivity (TFP)-by firm size and ex-post M&A time horizon (i.e., short-term vs. long-term effects). We conduct an empirical analysis on Korean firms using a covariate balancing propensity score methodology, which is the most advanced technique for propensity score matching. The main finding is that while firms can achieve technological advancements through M&A, they may not achieve optimal scale. Moreover, we find that large firms have M&A motives from a long-term perspective and perform M&A due to technological motives, while small and medium-sized enterprises (SMEs) have M&A motives from a short-term perspective for a one-point solution. This suggests that the motives of M&A are not uniform across large firms and SMEs and that they may prioritise different strategic objectives when undertaking M&A transactions.

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