Digital M&A and firm productivity in China

Using data from mergers and acquisitions (M&A) among Chinese listed firms from 2012 to 2021, this paper explores the influences of digital M&A on firms' total factor productivity (TFP) and the underlying mechanisms. Our findings reveal that digital M&A positively affect firms' TFP, which still holds after a series of robustness tests. According to mechanism tests, we find that digital M&A enhance firms' TFP through dual conduits: the refinement of the human capital structure within firms, and the escalation of firms' investment in research and development (R&D). Further heterogeneous analysis show that the stimulating effect of digital M&A on firms' TFP is more pronounced in highly competitive industries, in regions characterized by superior market development, and within non-state-owned enterprises.