Assessing the Effects of Mergers and Acquisitions on Firm Performance, Plant Productivity, and Workers: New Evidence from Matched Employer-Employee Data
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)
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Studies of the effects of mergers and acquisitions focus on a single unit of analysis: firms, plants, or workers. In contrast, we model these events as transactions that simultaneously have cross-levels effects. Based on the theory of human capital, we generate a set of predictions regarding the antecedents and consequences of firm, plant, and worker turnover. Our empirical analysis is based on longitudinal, linked employer-employee data for virtually the entire population of Swedish manufacturing firms and employees for the period 1985-1998. These data allow us to assess the effects of mergers and acquisitions on firm performance, plant productivity, levels of employment, and compensation. Consistent with human capital theory, we find that mergers and acquisitions lead to improvements in firm performance and plant productivity, although they also result in the downsizing of establishments and firms. These transactions also appear to enhance the careers of workers because they provide a mechanism for improving the sorting and matching or workers and managers to firms and industries that best suit their skills.
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Find related papers by JEL classification: G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Microeconomic Data
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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[Downloadable!]
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[Downloadable!] (restricted)
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Andrei Shleifer & Lawrence H. Summers, 1988.
"Breach of Trust in Hostile Takeovers,"
NBER Chapters,
in: Corporate Takeovers: Causes and Consequences, pages 33-68
National Bureau of Economic Research, Inc.
[Downloadable!]
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