Post-merger restructuring and the boundaries of the firm

Vojislav Maksimovic, Gordon Phillips and N.R. Prabhala

Journal of Financial Economics, 2011, vol. 102, issue 2, 317-343

Abstract: 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.

Keywords: Mergers; Acquisitions; Divestitures; Selloffs; Closures; Restructuring; Firm boundaries; Theory of the firm; Post-merger performance; Agency theory (search for similar items in EconPapers)
JEL-codes: D23 G34 L22 L25 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (81)

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Related works:
Working Paper: Post-Merger Restructuring and the Boundaries of the Firm (2011)
Working Paper: Post-Merger Restructuring and the Boundaries of the Firm (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:102:y:2011:i:2:p:317-343

DOI: 10.1016/j.jfineco.2011.05.013

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