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The Dynamic Impacts of M&A on Employment in Japan : Using Micro-data from the Financial Statements Statistics of Corporations by Industry

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Author Info

  • Hiroyuki Taguchi

    (Policy Research Institute)

  • Taichi Yanagawa
  • Masashi Harita

Abstract

This paper provides empirical evidence on the effects of mergers and acquisitions (M&A) on employment in Japan. It contributes to the literature by capturing dynamic employment impacts of various types of M&A using the latest micro data of firms financial statements. Our main findings are : the dynamic effect of firm acquisitions on a target firms employment proved to be significantly positive mainly in the manufacturing sector, while the dynamic effect of mergers on a remaining firms employment turned out to be significantly negative mainly in the non-manufacturing sector. The switching pattern from negative impact to positive impact on a target firms employment in the dynamic post-acquisition process appeared more clearly in the domestic acquisition case than in the cross-border acquisition case for the manufacturing sector. We speculate that the dynamic positive employment effect of firm acquisitions reflects the efficiency gains by a firms management improvements in the post-acquisition process, whereas the dynamic negative employment effect of mergers implies organizational rationalization in the post-merger process.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 23114.

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Date of creation: Jan 2010
Date of revision:
Handle: RePEc:eab:microe:23114

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Related research

Keywords: M&A; firm acquisitions; mergers; dynamic employment effects;

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References

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  1. Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2002. "The impact of mergers and acquisitions on company employment in the United Kingdom," European Economic Review, Elsevier, vol. 46(1), pages 31-49, January.
  2. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  4. Mitchell, Mark L. & Mulherin, J. Harold, 1996. "The impact of industry shocks on takeover and restructuring activity," Journal of Financial Economics, Elsevier, vol. 41(2), pages 193-229, June.
  5. Harford, Jarrad, 2005. "What drives merger waves?," Journal of Financial Economics, Elsevier, vol. 77(3), pages 529-560, September.
  6. Sang V Nguyen & Robert H Mcguckin & Arnold P Reznek, 1995. "The Impact Of Ownership Change On Employment, Wages, And Labor Productivity In U.S. Manufacturing 1977-87," Working Papers 95-8, Center for Economic Studies, U.S. Census Bureau.
  7. McGuckin, Robert H. & Nguyen, Sang V., 2001. "The impact of ownership changes: a view from labor markets," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 739-762, April.
  8. Nickell, Stephen, 1984. "An Investigation of the Determinants of Manufacturing Employment in the United Kingdom," Review of Economic Studies, Wiley Blackwell, vol. 51(4), pages 529-57, October.
  9. Gugler, Klaus & Yurtoglu, B. Burcin, 2004. "The effects of mergers on company employment in the USA and Europe," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 481-502, April.
  10. Dutz, Mark A., 1989. "Horizontal mergers in declining industries : Theory and evidence," International Journal of Industrial Organization, Elsevier, vol. 7(1), pages 11-33, March.
  11. Kevin Amess & Mike Wright, 2007. "The Wage and Employment Effects of Leveraged Buyouts in the UK," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(2), pages 179-195.
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Cited by:
  1. Hiroyuki Taguchi & Taichi Yanagawa & Masashi Harita, 2012. "Impact of M&A on the Employment in Japanese Companies," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(5), pages 581-608, November.

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