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The Dynamic Impacts of M&A on Employment in Japan : Using Micro-data from the Financial Statements Statistics of Corporations by Industry

Author

Listed:
  • Hiroyuki Taguchi

    (Policy Research Institute)

  • Taichi Yanagawa
  • Masashi Harita

Abstract

This paper provides empirical evidence on the effects of mergers and acquisitions (M&A) on employment in Japan. It contributes to the literature by capturing dynamic employment impacts of various types of M&A using the latest micro data of firms financial statements. Our main findings are : the dynamic effect of firm acquisitions on a target firms employment proved to be significantly positive mainly in the manufacturing sector, while the dynamic effect of mergers on a remaining firms employment turned out to be significantly negative mainly in the non-manufacturing sector. The switching pattern from negative impact to positive impact on a target firms employment in the dynamic post-acquisition process appeared more clearly in the domestic acquisition case than in the cross-border acquisition case for the manufacturing sector. We speculate that the dynamic positive employment effect of firm acquisitions reflects the efficiency gains by a firms management improvements in the post-acquisition process, whereas the dynamic negative employment effect of mergers implies organizational rationalization in the post-merger process.

Suggested Citation

  • Hiroyuki Taguchi & Taichi Yanagawa & Masashi Harita, 2010. "The Dynamic Impacts of M&A on Employment in Japan : Using Micro-data from the Financial Statements Statistics of Corporations by Industry," Microeconomics Working Papers 23114, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:23114
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    File URL: http://www.eaber.org/node/23114
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    References listed on IDEAS

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    1. Mitchell, Mark L. & Mulherin, J. Harold, 1996. "The impact of industry shocks on takeover and restructuring activity," Journal of Financial Economics, Elsevier, vol. 41(2), pages 193-229, June.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2002. "The impact of mergers and acquisitions on company employment in the United Kingdom," European Economic Review, Elsevier, vol. 46(1), pages 31-49, January.
    4. Kevin Amess & Mike Wright, 2007. "The Wage and Employment Effects of Leveraged Buyouts in the UK," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(2), pages 179-195.
    5. McGuckin, Robert H. & Nguyen, Sang V., 2001. "The impact of ownership changes: a view from labor markets," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 739-762, April.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Gugler, Klaus & Yurtoglu, B. Burcin, 2004. "The effects of mergers on company employment in the USA and Europe," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 481-502, April.
    8. Harford, Jarrad, 2005. "What drives merger waves?," Journal of Financial Economics, Elsevier, vol. 77(3), pages 529-560, September.
    9. Sang V Nguyen & Robert H Mcguckin & Arnold P Reznek, 1995. "The Impact Of Ownership Change On Employment, Wages, And Labor Productivity In U.S. Manufacturing 1977-87," Working Papers 95-8, Center for Economic Studies, U.S. Census Bureau.
    10. Stephen Nickell, 1984. "An Investigation of the Determinants of Manufacturing Employment in the United Kingdom," Review of Economic Studies, Oxford University Press, vol. 51(4), pages 529-557.
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    Cited by:

    1. Hiroyuki Taguchi & Taichi Yanagawa & Masashi Harita, 2012. "Impact of M&A on the Employment in Japanese Companies," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(5), pages 581-608, November.

    More about this item

    Keywords

    M&A; firm acquisitions; mergers; dynamic employment effects;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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