IP protection and ownership in cross-border acquisitions

We use the institutional theory to examine the impact of intellectual property protection on US multinational corporations (MNCs) ownership levels of their foreign acquisitions. Based on a sample of 7238 completed international M&A deals made by US MNCs from 1998 to 2017, we found that multinationals protect their intellectual property through more ownership when they are technologically intensive and invest more when IP protection is strong. However, IP protection negatively moderates the need for more ownership for technologically-intensive multinational corporations. Our results are robust to a battery of empirical tests, including a unique instrumental variable approach. This leads us to claim that our results are not merely correlated but are causal.