Abstract

http://ssrn.com/abstract=1213125
 
 

References (49)



 
 

Citations (18)



 


 



Post-Merger Restructuring and the Boundaries of the Firm


Vojislav Maksimovic


University of Maryland - Robert H. Smith School of Business

Gordon M. Phillips


University of Southern California; National Bureau of Economic Research (NBER)

Nagpurnanand R. Prabhala


University of Maryland - Robert H. Smith School of Business

August 1, 2008


Abstract:     
Mergers and acquisitions are a fast way for a firm to grow. Using plant-level data, we examine how firms redraw their boundaries after acquisitions. We find that there is a large amount of restructuring in a short period following mergers. Acquirers sell 27% and close 19% of acquired plants within three years of the acquisition. Plants in the target's peripheral divisions, especially in industries in which asset values are increasing, and in industries in which the acquirer does not have a comparative advantage, are more likely to be sold by the acquirer. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Plants retained by acquirers increase in productivity whereas sold plants do not. The extent of post-merger restructuring activities and their cross-sectional variation do not support an empire building explanation for mergers. Acquirers readjust their firm boundaries in ways that are consistent with the exploitation of their comparative advantage across industries.

Number of Pages in PDF File: 53

Keywords: acquisitions, mergers, investment, dispositions, conglomerate, restructuring, productivity

JEL Classification: G0, G2, G3, L11, D24

working papers series


Download This Paper

Date posted: August 10, 2008  

Suggested Citation

Maksimovic, Vojislav and Phillips, Gordon M. and Prabhala, Nagpurnanand R., Post-Merger Restructuring and the Boundaries of the Firm (August 1, 2008). Available at SSRN: http://ssrn.com/abstract=1213125 or http://dx.doi.org/10.2139/ssrn.1213125

Contact Information

Vojislav Maksimovic (Contact Author)
University of Maryland - Robert H. Smith School of Business ( email )
Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)
HOME PAGE: http://www.rhsmith.umd.edu/finance/vmax/
Gordon M. Phillips
University of Southern California ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Nagpurnanand R. Prabhala
University of Maryland - Robert H. Smith School of Business ( email )
4427 Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2165 (Phone)
301-405-0359 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 666
Downloads: 181
Download Rank: 63,209
References:  49
Citations:  18

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.297 seconds