Why do firms choose acqui-hires, acquisitions primarily to obtain a target’s team, when they could hire the workers directly instead? I argue that preserving gains from team complementarity that direct hiring would leave unrealized can justify the additional acquisition cost. I develop a novel deal-level measure identifying 12,271 acqui-hires and document that they keep target teams more intact and produce more inventions inside the acquirer than direct hiring of comparable teams. COVID-19 disruptions to work requiring in-person coordination reduce the acqui-hire advantage in joint invention and shift firms toward direct hiring, providing causal evidence for this explanation. However, acqui-hires may reduce innovation diffusion by redirecting the team’s inventions toward the acquirer’s technology, as patents closer to that technology receive fewer citations from other firms. To evaluate the net effect on aggregate innovation, I estimate a structural model and find that an acqui-hire ban would shift firms toward partial-team hiring, reducing invention through lost team complementarity. Merger review should therefore recognize that restricting acqui-hires can backfire, reducing both innovation production and diffusion despite the benefit of preserving startups’ independent innovation direction.

China’s technological progress in recent decades has been viewed with admiration, alarm, and (in some cases) doubt. To better understand the Chinese innovation ecosystem, we compile a dataset of almost 14 million domestic Chinese patent publications. We focus on the subset of critical technologies identified by the U.S. Department of Defense. Several surprising patterns emerge from the data: Chinese patenting is strongly associated with other measures of innovative progress; patents are not concentrated in corporate giants such as Huawei; universities have played a key role in innovation, much greater than state-owned enterprises or government-owned facilities; and fewer than one in ten Chinese critical technology patents involves an inventor with U.S. experience or training. Finally, using four text-based measures of patent quality, we show that the rise of Chinese patenting in critical technologies has not been associated with a decline in quality relative to the U.S. awards.

We study how an acquirer’s public visibility affects antitrust enforcement in mergers and its real economic consequences. Using a novel dataset linking FTC and DOJ inspection outcomes to news coverage of merger parties, we find that a 10 percent increase in the acquirer’s share of industry news coverage raises the likelihood of being flagged by 1.5 to 3 percent. We establish causality using geographical proximity to media outlets as an exogenous source of variation in news coverage. We interpret these results through a political-accountability framework: higher visibility raises the reputational stakes of enforcement, leading regulators to challenge more visible acquirers. Consistent with this accountability framework, the visibility gradient strengthens during congressional appropriations hearings and disappears in lame-duck periods. It is also substantially stronger in consumer-facing industries, where accountability pressures are highest. Finally, visibility-driven scrutiny has real effects: overlooked low-visibility deals gain market power, while flagged acquirers expand inefficiently and face a higher financial burden. Our results highlight how public salience distorts merger review and generates persistent post-merger inefficiencies.

We show that investors misreact to technological innovations based on their novelty, and that these misreactions distort firms’ subsequent innovation directions. First, using textual measures of novelty, we find that investors underreact to the issuance of novel innovations but overreact to non-novel ones. Novel patent issuance predicts lower risk and positive earnings forecast errors, consistent with mispricing rather than compensation for risk. A model where boundedly-rational investors are uncertain about the true novelty of a patent at issuance explains the empirical patterns well. Second, using sensational news as an exogenous shock to misreaction, we present causal evidence that, after disappointing returns to patent news, firms follow up less on current technologies, and novel firms shift future innovations from novelty-seeking to copycatting when exploring new areas. The findings highlight that investors’ misreactions to patent novelty steer innovation away from higher-valued, groundbreaking research.