Cross-border M&As of biotech firms affiliated with internationalized universities

This paper provides a conceptual and empirical account of the role of the firms’ affiliation with universities in the international market for assets. We investigate whether the prestige and the internationalization of a university affect the propensity of affiliated spin-offs to be targeted in cross-border M&As. This is because the affiliation with a prestigious university is expected to increase the technological capabilities and network opportunities of affiliated firms and to provide a more dynamic and mobile human capital. Moreover, in high tech markets the reputation of the affiliated university helps overcoming information asymmetry on the quality of the firm and its market value. Using a sample of 220 biotech firms that went public in Europe over the period 1995–2006, we find that firms affiliated with more prestigious and internationalized universities are more prone to be targeted in cross-border M&As. Results are robust to different methodologies, definitions and endogeneity of prestige and internationalization.