Acquiring organizational capital

Peixin Li, Frank Weikai Li, Baolian Wang and Zilong Zhang

Finance Research Letters, 2018, vol. 25, issue C, 30-35

Abstract: Organizational capital is the accumulation and use of private information to enhance economic efficiency for a firm. Theory has argued that organizational capital is typically embodied in employees and the organizational structure, and is hard to transfer across organizations. In this paper, we study whether organizational capital is transferable across firms via mergers. The evidence shows that acquirers gain more from acquiring firms with higher organizational capital and acquirers are also willing to pay a higher premium for higher organizational capital targets. The evidence suggests that acquiring higher organizational capital targets creates synergies which are shared between acquirers and targets.

Keywords: Organizational capital; Mergers and acquisitions; Synergy; Abnormal returns (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:25:y:2018:i:c:p:30-35

DOI: 10.1016/j.frl.2017.10.004

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