Digital M&A,Digital Transformation And Corporate Performance

Digital mergers and acquisitions refer to the acquisition of a company in the past three years,with the purpose of acquisition(or merging)those companies that use digital technologies as key elements of their business models.According to relevant statistics,in 2022,there were 187 completed data center M&A transactions worldwide,with a total value of $48billion.Existing research has found that digital M&A can improve corporate performance by assisting companies in establishing digital knowledge repositories,acquiring digital technologies and research and development resources from target companies,and enhancing technological innovation capabilities.Additionally,the knowledge base of the acquirer can positively mediate the relationship between digital transformation in M&A and corporate innovation.However,current research has not explored the mechanisms through which digital M&A affects corporate performance nor delved into the relationship between digital M&A and corporate performance.Against the backdrop of an increasingly active digital M&A market,exploring the factors influencing the impact of digital M&A on corporate performance from the perspectives of the acquirer and transaction scale holds significant importance for the digitalization process across various industries in China.As the targets of digital M&A in the manufacturing sector are the digital technologies of the target companies,it is crucial to clarify whether the acquirer’s technological stock will affect its own corporate performance.Furthermore,the focus of this study is on investigating whether the regional digital ecosystem promotes value appreciation for the acquirer after digital M&A,thereby enhancing corporate performance.Given that transaction scale affects the costs,risks,and potential returns of digital M&A transactions,examining the impact of transaction scale on the acquirer’s corporate performance is necessary.Additionally,exploring whether there is an intermediary role of digital transformation between digital M&A and corporate performance is a crucial step in unraveling the "black box" phenomenon.Based on the data on digital M&A in the Chinese manufacturing industry from 2010 to2021,this study empirically examines the driving factors of acquirers,transaction characteristics,and regional environment in digital M&A,with the aim of enriching the understanding of the specific mechanisms through which digital M&A affects corporate performance.The empirical research results indicate the following:(1)The technological stock of acquirers can effectively facilitate the absorption and integration of target digital technologies,thereby enhancing corporate performance.(2)Transaction size has a significant positive impact on corporate performance,as large-scale M&A transactions can provide more resources and markets for rapid business development.(3)The regional digital ecosystem can moderate the effects of acquirer technological stock and transaction size on corporate performance.Specifically,the higher the regional digital ecosystem index of the operating area of the acquiring firm,the greater the promotion of corporate performance.(4)Digital transformation plays a mediating role in the relationship between transaction size and corporate performance,while it does not have a significant mediating effect between technological stock and corporate performance,possibly due to the resource absorption barriers caused by cross-industry M&A.Further heterogeneity analysis reveals that non-state-owned enterprises have a more pronounced effect on corporate performance compared to state-owned enterprises,and mature companies achieve better corporate performance in digital M&A.Based on the research results,several policy recommendations are proposed for digital M&A in the Chinese manufacturing industry at both the government and enterprise levels.At the enterprise level,these recommendations include establishing digital platforms,enhancing the scientific level of research and development decision-making,leveraging the dividends generated by the regional digital ecosystem to increase the scale of digital M&A transactions,conducting thorough due diligence and risk assessments prior to digital M&A to ensure feasibility and compliance of transactions,and carrying out post-merger activities such as cultural integration and talent retention to facilitate the smooth integration and utilization of digital technologies.At the government level,the recommendations involve formulating relevant regulatory policies and regulations to promote digital transformation and ensure fair competition,developing a series of encouraging and guiding policies to strengthen cooperation and collaboration in digital transformation,enhancing the construction of regional digital ecosystems,and strictly limiting subsidy periods,as well as strengthening the interaction and cooperation between the government and enterprises.By reviewing domestic and international literature related to digital M&A,this dissertation explores the uniqueness of M&A cases in Chinese manufacturing companies.Taking into account China’s distinctive market environment,the study examines the impact mechanisms and factors of digital M&A on corporate performance from the perspectives of acquirers and the transactions themselves.It identifies key indicators that influence the improvement of corporate performance,providing valuable insights and directions for the Chinese manufacturing industry.The dissertation establishes a research framework that links digital M&A to the impact on corporate performance,constructs a panel dataset for digital M&A in Chinese manufacturing companies,and provides empirical evidence from Chinese enterprises to understand the relationship between digital M&A and corporate performance.It plays a significant role in realizing the value of digital M&A and enhancing the acquirer’s corporate performance.