Mergers and Non-contractible Benefits: The Employees' Perspective

Wei Cai, Andrea Prat and Jiehang Yu

No 34920, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Incomplete contract theory, supported by anecdotal evidence, suggests that when a firm is acquired, workers may be adversely affected in non-contractible aspects of their work experience. This paper empirically investigates this prediction by combining M\&A events from the Refinitiv database and web-scraped Glassdoor review data. We find that: (a) Controlling for pre-trends, mergers lead to lower satisfaction, especially on non-contractible dimensions of the employee experience (about 6% of a standard deviation); (b) The effect is stronger in the target firm than in the acquiring firm; (c) Text analysis of employee comments indicates that the decline in satisfaction is primarily associated with perceived breaches of implicit contracts. Our findings indicate that mergers may reduce workers' job utility through non-monetary channels.

JEL-codes: D23 G34 J31 (search for similar items in EconPapers)
Date: 2026-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-hrm, nep-lma, nep-reg and nep-upt
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