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Understanding the productivity effect of M&A in Japan: An empirical analysis of the electronics industry from 1989 to 1998

  • Takechi, Kazutaka
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    This study examines the effect of mergers and acquisitions (M&A) on productivity. According to the literature, the effect of a merger or acquisition on an acquiring firm's productivity is small. We examine the extent to which self-selection of M&A contributes to the weak M&A effect. Using data on Japanese electronics firms from 1989 to 1998, our empirical analysis shows that without controlling for the self-selection of M&A, M&A have a weak or insignificant effect on total factor productivity (TFP), as suggested in the literature. However, controlling for self-selection reveals a positive and large effect on productivity. We find a negative correlation between M&A decisions and TFP caused by self-selection, which makes the M&A effect appear negligible when it is not controlled for. These results suggest that M&A served as an effective device for improving the productivity of the electronics firms in our sample.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0922142513000029
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    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 25-26 (2013)
    Issue (Month): ()
    Pages: 1-9

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    Handle: RePEc:eee:japwor:v:25-26:y:2013:i::p:1-9
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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