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Acquiring Labor

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  • Paige Ouimet
  • Rebecca Zarutskie

Abstract

We present evidence that some firms pursue M&A activity with the objective of obtaining a larger workforce. Firms most likely to be acquired for their large labor force, firms with the largest ex ante employment, are associated with more positive post-merger employment outcomes. Moreover, we find this relation is strongest when acquiring labor outside of an M&A is likely to be most difficult, due to tight labor conditions, or most valuable, in high human capital industries. We further find that high employment target firms are associated with relatively greater post-merger wage increases and lower post-merger employee turnover. We find no evidence that the positive relation between target ex ante employment and ex post employment change is driven by target asset size, market capitalization, industry, profitability or acquirer characteristics. Our findings do not exclude the possibility that a different subset of M&A activity may be motivated to penalize managers who have tolerated over-employment. Indeed, we find evidence consistent with this disciplinary motivation when considering acquisitions of targets in declining industries.

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File URL: ftp://ftp2.census.gov/ces/wp/2011/CES-WP-11-32.pdf
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 11-32.

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Length: 50 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:cen:wpaper:11-32

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Acquiring a firm for its workforce
    by Economic Logician in Economic Logic on 2011-11-09 15:18:00
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Cited by:
  1. Kuhnen, Camelia M. & Oyer, Paul, 2012. "Exploration for human capital: Theory and evidence from the MBA labor market," MPRA Paper 39411, University Library of Munich, Germany.

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  1. Economic Logic blog

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