Technology Blockade and M&As: An Empirical Study Based on Text Analysis

技术封锁与并购：基于文本分析的实证研究

Abstract

Sino-US relations have always been one of the important factors affecting the operation and development of Chinese enterprises. Since 2017, the United States has included a number of Chinese enterprises in the "Entity List" by promulgating the Export Control Regulations. Enterprises included in the Entity List will not be able to obtain key technologies and resources from the United States, which has a great impact on the innovation strategy and development strategy of Chinese enterprises. To explore the strategies and measures for Chinese enterprises to break the foreign technology blockade, it is necessary to explore the specific impact and mechanisms of technology blockade on Chinese enterprises. According to the resource dependence theory, the need for enterprises to obtain resources from the external environment will lead to dependence on the external environment, that is, environmental constraints. Mergers and acquisitions(M&As) are often regarded as an effective way for enterprises to absorb environmental constraints. However, technology blockade caused by macro-policies is different from conventional environmental constraints, which may affect the effectiveness of M&A as a means of absorbing constraints. Therefore, this paper intends to explore whether and how technology blockade affects M&A of Chinese enterprises. This paper selects the M&A events of listed companies in China from 2016 to 2022 as the initial research sample, and obtains 21,540 observations of 4,333 enterprises after processing. Based on the text analysis of the annual report of listed companies, this paper constructs the technology blockade index, and describes the degree of enterprises affected by technology blockade through the total word frequency ratio of technology blockade keywords in the annual report text. The annual report documents are from Juchao Information Network(cninfo), and other data used in this paper is from the China Stock Market Accounting Research(CSMAR) database. Then this paper constructs an OLS model to quantitatively evaluate the impact of technology blockade on M&A of Chinese enterprises and the moderating effect of resource redundancy. This paper finds that technology blockade reduces the number of M&A of Chinese enterprises, non-precipitating redundancy enhances the negative impact of technology blockade on the number of M&A, while precipitating redundancy has no significant impact on the relationship between technology blockade and the number of M&A. The conclusions mentioned above are still valid after a series of robustness tests, including changing estimation model, adjusting research samples and changing the measurement methods of dependent variables. In addition, the results of endogenous analysis show that the regression results of this paper are still robust under the condition of alleviating endogenous problems. Mechanism analysis shows that technology blockade increases the financing cost and difficulty of enterprises, increases the financing constraints faced by enterprises, and thus reduces the number of M&A. Furthermore, the heterogeneity analysis shows that technology blockade has a significant negative impact on the number of M&A when executives have overseas background or the industry has a high degree of competition, but it is not significant on the contrary. The main contributions of this paper are as follows: (1) Most of the existing literature focuses on the impact of technology blockade on innovation. This paper explores the influence of technology blockade on M&A and its boundary conditions, and further reveals its mechanism, which supplements the related research on technology blockade and M&A. (2) Based on the resource dependence theory, this paper analyzes the environmental constraints brought by the technology blockade initiated by the government, and the influence of the special nature of this environmental constraint on M&A, which expands the research on external environmental constraints. (3) Existing studies use proxy indicators such as trade freedom index and license approval number, which makes it difficult to directly describe the impact of technology blockade. This paper constructs technical blockade index through text analysis, which provides a useful reference for the measurement of technology blockade.