PRODUCTIVITY, RESTRUCTURING, AND THE GAINS FROM TAKEOVERS

Xiaoyang Li

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper investigates how takeovers create value. Using plant-level data, I show that acquirers increase targets’ productivity through more efficient use of capital and labor. Acquirers significantly reduce capital expenditures, wages, and employment in target plants, though output is unchanged. Acquirers improve targets’investment efficiency through better capital reallocation. Moreover, changes in productivity help explain the merging firms’ announcement returns. The combined announcement returns are driven by improvements in target’s productivity. Targets with greater productivity improvements receive higher premiums. These results provide some first empirical evidence on the relation between productivity and stock returns in the context of takeovers.

Keywords: Takeovers; Announcement returns; Productivity; Investments; Wages; Employment (search for similar items in EconPapers)
JEL-codes: D24 G34 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2013-04
New Economics Papers: this item is included in nep-cwa and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

Downloads: (external link)
https://www2.census.gov/ces/wp/2013/CES-WP-13-18.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Productivity, restructuring, and the gains from takeovers (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:13-18

Access Statistics for this paper

More papers in Working Papers from U.S. Census Bureau, Center for Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dawn Anderson ().