Are M&As with IT Firms More Value Additive than Non-IT Firms? A Paradigm Shift of M&A Puzzle

Mergers and acquisitions (M&As) are common investment tactics for corporate restructuring. They serve as dynamic strategies to improve firm performances by leveraging synergy benefits, economies of scale, acquisition premiums, market strength, positioning of new markets, risk reduction, and management integration, among other factors. Prior scholarly works present inadequate empirical evidence and analysis to examine if firms with strong IT capabilities should be the targets of M&As. To address this fundamental issue, we provide global evidence based on cross-country panel data between January 2002 and December 2021 for M&As with IT and non-IT specialized firms, along with an in-depth meta-analysis. Our results document that the market-based and accounting-based performances of M&As with IT firms are significantly higher than those of M&As with non-IT firms. M&As with IT firms have comparatively better financial stability, creditworthiness, and exposure to higher market value than corresponding M&As with non-IT firms. The study results and inferences are mostly consistent across all possible subsample analyses of cross-countries, group sizes, and crisis periods. Hence, M&As with IT affiliation possess comparatively higher value than M&As with non-IT sectors. This research study explores our understanding of dynamic corporate strategy and investment tactics in international business. JEL Classification G34