PRODUCTIVITY, RESTRUCTURING, AND THE GAINS FROM TAKEOVERS
Working Papers from U.S. Census Bureau, Center for Economic Studies
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: G34 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa and nep-eff
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https://www2.census.gov/ces/wp/2013/CES-WP-13-18.pdf First version, 2013 (application/pdf)
Journal Article: Productivity, restructuring, and the gains from takeovers (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:13-18
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