Impact of M&A on the Employment in Japanese Companies

Hiroyuki Taguchi (), Taichi Yanagawa and Masashi Harita
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Taichi Yanagawa: Former Researcher, Research Department, Policy Research Institute, Ministry of Finance
Masashi Harita: Former Section Chief, Statistical Research Department, Policy Research Institute, Ministry of Finance

Public Policy Review, 2012, vol. 8, issue 5, 581-608

Abstract: With utilizing Financial Statements Statistics of Corporation by Industry, we analyzed the impact of M&A on the employment in Japanese companies. In this study, the impact of M&A on the employment was extracted by developing panel data for fiscal year 1995 to 2008 targeting 9,880 sample companies including 3,697 cases of M&A to estimate a labor demand model. Major findings of the study are described below. First, dynamically positive effect was confirmed mainly in the manufacturing industry as the effect of "acquisition" on the employment in companies to be acquired (business expansion / growth effect of acquisition). Second, dynamically negative effect was confirmed mainly in the non-manufacturing industry as the effect of "merger" on the employment in surviving companies (consolidation effect of merger). Third, in the manufacturing industry, the effect on the employment went to positive from negative in acquisitions of domestic type (IN-IN), while only positive effect was found in cross boarder type (OUT-IN) (domestic type: business restructuring effect, cross boarder type: effect to "buy time"). Fourth, no evidence of "Breach of Trust" (wealth transfer from employees to the shareholders of acquiring company) was observed.

Date: 2012
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