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Assessing the effects of mergers and acquisitions on firm performance, plant productivity, and workers: newl evidence from matched employer‐employee data
Author(s) -
Siegel Donald S.,
Simons Kenneth L.
Publication year - 2010
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.843
Subject(s) - productivity , mergers and acquisitions , business , matching (statistics) , sorting , industrial organization , human capital , empirical evidence , labour economics , economics , finance , market economy , macroeconomics , philosophy , statistics , mathematics , epistemology , computer science , programming language
Empirical studies of mergers and acquisitions typically focus on firm‐level financial performance. In contrast, we use human capital theory to model these events as transactions that simultaneously have cross‐level, real effects on workers, plants, and firms. Our empirical analysis is based on longitudinal, linked employer‐employee data for virtually all Swedish manufacturing firms and employees. We find that mergers and acquisitions enhance plant productivity, although they also result in the downsizing of establishments and firms. Firm performance does not decline in the aftermath of these ownership changes. We conclude that such transactions constitute a mechanism for improving the sorting and matching of plants and workers to more efficient uses. Copyright © 2010 John Wiley & Sons, Ltd.