Should Employment Authorities Worry About Mergers and Acquisitions?

Margolis, David

Should Employment Authorities Worry About Mergers and Acquisitions?

No 1994, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper considers the role mergers and acquisitions have on employment. First, it considers the importance of different aspects of compensation policy and human resource management practices 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 very few observable workforce or compensation characteristics distinguish acquired from acquiring firms ex-ante. Nevertheless, the human resources department seems to be quite active in the post-takeover period, with employees of the acquired firm being less likely to remain with the new entity in the short term after takeover than those of the acquiring firm and with the differences between the two types of firms disappearing after 3 years. The workers with characteristics that tend to be associated with the fastest subsequent job finding in the displaced worker literature are also those who tend to be overrepresented among the individuals who separate from their employer post-takeover. Finally, as both acquired and acquiring firms differ from firms not involved in takeover activity in a similar manner, employment authorities may be able to anticipate the regions in which takeovers are more likely to occur by looking at the financial accounts of firms with particular characteristics that have local establishments.

Keywords: employment; takeovers; linked employer-employee data (search for similar items in EconPapers)
JEL-codes: G34 J21 J23 J31 J63 L29 M51 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2006-03
New Economics Papers: this item is included in nep-com, nep-fin and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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