CORPORATE RAIDERS DONT CUT INVESTMENT IN R-AND-D

A focal point of the public debate over the effects of corporate mergers and acquisitions is their impact on the level of spending on long term projects. This study examines the pre- and post-merger levels of spending on R & D and the more general category of capital expenditures. Analysis of expenditures for a sample of firms drawn from the largest corporate mergers in the US during the late 1970s indicate that long term spending rises significantly in the post-merger environment. This supports the view that acquiring firms, whether hostile or friendly, recognize the relationship between such spending and firm value.