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Compensation Policy, Human Resource Management Practices and Takeovers

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  • David Margolis

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Abstract

This paper uses a unique linked employer-employee data (LEED) set to examine thedeterminants of mergers and acquisitions and to study post-takeover employment. It findthat firms involved in takeovers are qualitatively different from non-takeover firms andthat post-takeover employment probabilities are highly dependent on individualcharacteristics (human resource management policies) and the firm's pre-takeovercompensation policy. It also discusses the value of LEED for such an analysis and drawsconclusions for industrial and labor policy based on combining these results with resultsfrom the literature on displaced workers.

Suggested Citation

  • David Margolis, 2005. "Compensation Policy, Human Resource Management Practices and Takeovers," Working Papers 2005-32, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2005-32
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    References listed on IDEAS

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    1. Gokhale, Jagadeesh & Groshen, Erica L & Neumark, David, 1995. "Do Hostile Takeovers Reduce Extramarginal Wage Payments?," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 470-485, August.
    2. Marianne Bertrand & Sendhil Mullainathan, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1043-1075, October.
    3. Bradley, Michael & Desai, Anand & Kim, E. Han, 1983. "The rationale behind interfirm tender offers : Information or synergy?," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 183-206, April.
    4. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(2), pages 110-110.
    5. John G. Matsusaka, 1993. "Takeover Motives during the Conglomerate Merger Wave," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 357-379, Autumn.
    6. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73(4), pages 351-351.
    7. Bruce C. Fallick, 1996. "A Review of the Recent Empirical Literature on Displaced Workers," ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
    8. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    9. David Margolis, 2002. "Licenciements collectifs et durée entre deux emplois," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353833, HAL.
    10. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
    11. Peter J. Kuhn (ed.), 2002. "Losing Work, Moving On: International Perspectives on Worker Displacement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number lwmo, November.
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    Cited by:

    1. Smeets, Valérie & Ierulli, Kathryn & Gibbs, Michael, 2006. "Mergers of Equals & Unequals," Working Papers 06-8, University of Aarhus, Aarhus School of Business, Department of Economics.
      • Smeets, Valerie & Ierulli, Kathryn & Gibbs, Michael, 2008. "Mergers of Equals & Unequals," Working Papers 221, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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