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Co-determination and Merger Incentives from Transfers of Wealth: Firm Owners vs. Workers

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Abstract

When workers can capture rents from their influence on corporate decisions, mergers can become a device to generate transfers of wealth. This paper examines the merger incentives from these transfers of wealth. It is found that worker influence increases merger profitability, in line with the owners’ incentive to use mergers to reduce the rents captured by workers. In contrast, the workers’ merger incentives are shown to be decreasing in their own degree of influence on the merger decision, in line with the view according to which workers can be used by incumbent managers as a defensive instrument in acquisitions.

Suggested Citation

  • M. Paz Coscollá & Luis M. Granero, 2010. "Co-determination and Merger Incentives from Transfers of Wealth: Firm Owners vs. Workers," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 4(2), pages 123-138, June.
    • Handle: RePEc:fau:aucocz:au2010_123
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    References listed on IDEAS

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    1. Morton I. Kamien & Israel Zang, 1987. "The Limits of Monopolization Through Acquisition," Discussion Papers 754, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Gonzalez-Maestre, Miguel & Lopez-Cunat, Javier, 2001. "Delegation and mergers in oligopoly," International Journal of Industrial Organization, Elsevier, vol. 19(8), pages 1263-1279, September.
    3. Morton I. Kamien & Israel Zang, 1990. "The Limits of Monopolization Through Acquisition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 465-499.
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    More about this item

    Keywords

    Mergers; shareholders; stakeholders; worker influence; co-determination;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights

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