Implicit contracts and acquisitions: An econometric case study of the nineteenth century Australian banking industry

Andrew J. Seltzer

No 48, CEH Discussion Papers from Centre for Economic History, Research School of Economics, Australian National University

Abstract: It has been argued that hostile takeovers redistribute wealth from workers to shareholders by enabling the acquiring firm to revoke implicit contracts. This paper uses micro-data from personnel records to examine the consequences of the Union Bank of Australia’s 1892 takeover of the Bank of South Australia. The evidence confirms that the lifetime earnings of older workers at the BSA declined because of the merger. They faced a high probability of losing their jobs immediately following the merger, lost specific human capital due to the closure of branches, faced a flatter salary profile over the remainder of their career, and received a reduced pension.

Date: 2016-10
New Economics Papers: this item is included in nep-age and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:auu:hpaper:048

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