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How general is managerial human capital?: Evidence from the Retention of Managers after M&As

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  • Hirata Kenjiro

    (Faculty of Economics, Kobe International University, 9-1-6 Koyocho-naka, Higashinada-ku, Kobe, Hyogo 658-0032, Japan .)

  • Suzuki Ayako

    (School of International Liberal Studies, Waseda University, 1-6-1, Nishi-Waseda, Shinjuku, Tokyo, 169-8050, Japan .)

  • Takii Katsuya

    (Osaka School of International Public Policy, Osaka University, 1-31, Machikameyama, Toyonaka, Osaka, 560-0043, Japan .)

Abstract

This paper investigates the transferability of managerial human capital by examining how managers’ tenures in target firms influence their probability of retention as board members after mergers or acquisitions in Japanese firms. It develops a general equilibrium model that distinguishes several hypotheses on managerial human capital based on the coefficients of tenure on separation, given several data limitations. In particular, the paper provides a novel method to correct for selection biases by utilizing the timing of selection in a selected sample, which does not require a random sample from the population. Our results suggest that Japanese firms value both target firm-specific and general human capital after M&As and that experience as an employee increases firm-specific skills, but at the expense of the accumulation of general skills. However, managerial experience does not have this effect.

Suggested Citation

  • Hirata Kenjiro & Suzuki Ayako & Takii Katsuya, 2023. "How general is managerial human capital?: Evidence from the Retention of Managers after M&As," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-40, January.
    • Handle: RePEc:vrs:izajle:v:12:y:2023:i:1:p:40:n:6
    DOI: 10.2478/izajole-2023-0008
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    More about this item

    Keywords

    Tenure; Managerial Skill; Managerial Turnover after M&As; Selection Bias; Cox Proportional Hazards Model; G34; J41; J63;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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