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Post-Merger Restructuring and the Boundaries of the Firm

  • Vojislav Maksimovic
  • Gordon Phillips
  • Nagpurnanand Prabhala

We examine how firms redraw their boundaries after acquisitions using plant-level data. We find that there is extensive restructuring in a short period following mergers and full-firm acquisitions. Acquirers of full firms sell 27% and close 19% of the plants of target firms within three years of the acquisition. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Retained plants increase in productivity whereas sold plants do not. These results suggest that acquirers restructure targets in ways that exploit their comparative advantage.

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File URL: ftp://ftp2.census.gov/ces/wp/2011/CES-WP-11-11.pdf
File Function: First version, 2011
Download Restriction: no

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 11-11.

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Length: 55 pages
Date of creation: Apr 2011
Date of revision:
Handle: RePEc:cen:wpaper:11-11
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