Compensation Policy, Human Research Management Practices and Takeovers

David Margolis

Post-Print from HAL

Abstract: This paper considers the role of compensation policy and human resource management practices in mergers and acquisitions. First, it considers the importance of different aspects of these two employee-side characteristics for distinguishing acquired and acquiring firms. Second, it examines which individuals from which firms remain with the newly created entity after the takeover. Using a unique employer-employee linked data set for France, we find that acquired firms tend to under pay and under reward seniority relative to acquiring firms and they also tend to employ workers whose average job seniority is lower. Despite the minimal differences ex ante in the characteristics of the workforces of acquired and acquiring firms, the human resources department seems to be quite active in the post-takeover period, with employees of the taken over firm being much less likely to remain with the new entity after takeover than those of the acquiring firm. The workers with characteristics that earn high returns in the market are also those who are more likely to stay after the takeover occurs, while employees of acquiring firms that less generously rewarded seniority before the takeover are more likely to remain with the successor firm afterwards, as are those of acquired firms that rewarded seniority particularly well. These results are consistent with Jensen and Meckling's (1976) model of takeovers as a means of controlling the actions of managers.

Keywords: Mergers and Acquisitions; Takeovers; Employment; Linked Employer-Employee Data (LEED) (search for similar items in EconPapers)
Date: 2005-06
References: Add references at CitEc
Citations:

Published in Joint Society of Labor Economists and European Association of Labour Economists World Congress, Jun 2005, San Francisco, United States

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Compensation Policy, Human Research Management Practices and Takeovers (2005)
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:hal:journl:halshs-00364877

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().