Professor Zhisheng Li, the director of the base, published a collaborative paper titled "Does Internet Enterprise M&A Inhibit Corporate Innovation? —From the Perspective of Hierarchical Monopolistic Competition Structure" in the July 2024 issue (No. 529) of Financial Research.

Abstract：In recent years, the wave of mergers and acquisitions (M&A) by internet companies has attracted the attention of society and regulatory authorities due to issues such as capital expansion and monopoly. Based on the data of listed internet companies in China from 2010 to 2020, this paper explores the impact of internet company M&A on innovation in conjunction with the market structure characteristics of the internet industry. The study finds that China's internet industry exhibits a hierarchical monopolistic competitive structure where monopoly and competition coexist stably. The innovation input of monopolistic enterprises significantly decreases after M&A, while that of competitive enterprises significantly increases. Mechanism analysis indicates that M&A significantly alters the innovation willingness and conditions of internet companies, thereby affecting innovation input. The "polarized" market structure leads monopolistic and competitive enterprises to form different M&A motivations and produce different innovation effects. Heterogeneous analysis shows that the impact of M&A on innovation is more significant in the eastern region where market structure characteristics are more pronounced; the innovation suppression effect of monopolistic enterprises is concentrated in the sample of horizontal M&A, while the innovation promotion effect of competitive enterprises is concentrated in the sample of vertical M&A; the impact of M&A on innovation presents substitutive and complementary effects with the transparency of corporate information and the external supervision environment, respectively. Further research finds that the financial risk of monopolistic enterprises increases after M&A, while M&A of competitive enterprises can significantly enhance corporate value. This paper provides a new perspective and empirical evidence for studying how M&A in China's internet industry affects innovation and offers valuable references for guiding the healthy development of the internet industry, promoting orderly competition, and sustainable innovation.

Author profile

Zhisheng Li, Vice President and Professor of Southwest University of Finance and Economics, Director of Innovation and Talent Base for Digital Technology and Finance.He mainly engages in research on financial innovation, financial risk management, market microstructure, and regional financial development. He has presided over multiple projects such as the Innovation and Intelligence Introduction Plan for Disciplines in Colleges and Universities, major projects from the National Social Science Fund, and youth and general projects from the National Natural Science Foundation. His research findings have been published in journals such as Economic Research Journal, China Economic Quarterly, Financial Research, Journal of Banking and Finance, and Journal of Financial Markets.