The innovation effect of digital M&As: Evidence from China

Digital mergers and acquisitions (M&As) have gained global momentum. However, whether digital M&As can effectively stimulate corporate innovation awaits further research. This paper evaluates the causal effect of digital M&As on corporate innovation using data from digital M&As and patents of Chinese A-share listed companies. Our findings indicate that digital M&As significantly promote the quantity and quality of acquirers' innovation, which still holds after various robustness tests and exhibits heterogeneity in different dimensions such as transactions, acquirers, and targets. Mechanism tests further reveal that knowledge synergy, financial synergy, and human capital structure upgrading are critical channels through which digital M&As promote the acquirers' innovation.