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Ownership Change, Productivity, and Human Capital: New Evidence from Matched Employer-Employee Data in Swedish Manufacturing

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  • Donald S. Siegel

    ()
    (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)

  • Kenneth L. Simons

    ()
    (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)

  • Tomas Lindstrom

    ()
    (National Institute of Economic Research, Box 3116, SE-103 62 Stockholm, Sweden)

Abstract

Empirical studies of the impact of changes in ownership of manufacturing plants on productivity (e.g., Lichtenberg and Siegel (1987, 1990a, 1990b), McGuckin and Nguyen (1995, 2001), and Maksimovic and Phillips (2001)) have provided limited evidence on how such transactions affect investment in human capital and have been based strictly on U.S. and U.K. data. We attempt to fill these gaps, based on an analysis of matched employer-employee data from over 19,000 Swedish manufacturing plants for the years 1985-1998. The sample covers virtually the entire population of manufacturing plants with 20 or more employees and a probability-based sample of smaller plants. We assess whether there are differential effects on productivity and human capital for different types of ownership changes, such as partial and full acquisitions and divestitures, and related and unrelated acquisitions. Our results suggest that ownership change results in an increase in relative productivity. We also find that plants involved in these transactions experience increases in average employee age, experience, and the percentage of employees with a college education. Ownership change also leads to an increase in wages and a reduction in the percentage of female workers. All of these patterns emerge most strongly for full acquisitions and divestitures and unrelated acquisitions.

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Bibliographic Info

Paper provided by Rensselaer Polytechnic Institute, Department of Economics in its series Rensselaer Working Papers in Economics with number 0502.

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Date of creation: Mar 2005
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Handle: RePEc:rpi:rpiwpe:0502

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  1. Richard Harris & Donald S. Siegel & Mike Wright, 2003. "Assessing the Impact of Management Buyouts on Economic Efficiency: Plant-Level Evidence from the United Kingdom," Rensselaer Working Papers in Economics 0304, Rensselaer Polytechnic Institute, Department of Economics.
  2. Mueller, Dennis C, 1969. "A Theory of Conglomerate Mergers," The Quarterly Journal of Economics, MIT Press, vol. 83(4), pages 643-59, November.
  3. Boyan Jovanovic & Peter L. Rousseau, 2002. "Mergers as Reallocation," NBER Working Papers 9279, National Bureau of Economic Research, Inc.
  4. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
  5. Lichtenberg, Frank R & Siegel, Donald, 1990. "The Effect of Ownership Changes on the Employment and Wages of Central Office and Other Personnel," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 383-408, October.
  6. 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.
  7. Vojislav Maksimovic & Gordon Phillips, 2002. "Do Conglomerate Firms Allocate Resources Inefficiently Across Industries? Theory and Evidence," Journal of Finance, American Finance Association, vol. 57(2), pages 721-767, 04.
  8. Kenneth R Troske, 1995. "The Worker-Establishment Characteristics Database," Working Papers 95-10, Center for Economic Studies, U.S. Census Bureau.
  9. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
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  14. Griffith, Rachel, 1999. "Using the ARD Establishment Level Data to Look at Foreign Ownership and Productivity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 109(456), pages F416-42, June.
  15. Donald S. Siegel, 1999. "Skill-Biased Technological Change: Evidence from a Firm-Level Survey," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number sbtc.
  16. Michael C. Jensen, 1994. "The Modern Industrial Revolution, Exit, And The Failure Of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(4), pages 4-23.
  17. Robert H. McGuckin & Sang V. Nguyen & Arnold P. Reznek, 1998. "On Measuring the Impact of Ownership Change on Labor: Evidence from U.S. Food-Manufacturing Plant-Level Data," NBER Chapters, in: Labor Statistics Measurement Issues, pages 207-248 National Bureau of Economic Research, Inc.
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  21. Robert H. McGuckin & Sang V. Nguyen, 1995. "On Productivity and Plant Ownership Change: New Evidence from the Longitudinal Research Database," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 257-276, Summer.
  22. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
  23. 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.
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Cited by:
  1. John Marsh & Donald S. Siegel & Kenneth L. Simons, 2006. "Assessing the Effects of Ownership Change on Women and Minority Employees: Evidence from Matched Employer-Employee Data," Rensselaer Working Papers in Economics 0607, Rensselaer Polytechnic Institute, Department of Economics.
  2. Shutao Cao, 2008. "A Model of Costly Capital Reallocation and Aggregate Productivity," Working Papers 08-38, Bank of Canada.
  3. repec:ebl:ecbull:v:30:y:2010:i:1:p:614-623 is not listed on IDEAS
  4. Donald S. Siegel & Kenneth L. Simons, 2006. "Assessing the Effects of Mergers and Acquisitions on Firm Performance, Plant Productivity, and Workers: New Evidence from Matched Employer-Employee Data," Rensselaer Working Papers in Economics 0601, Rensselaer Polytechnic Institute, Department of Economics.

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