Post-Merger Restructuring and the Boundaries of the Firm
University of Maryland - Robert H. Smith School of Business
Gordon M. Phillips
University of Southern California; National Bureau of Economic Research (NBER)
University of Maryland - Robert H. Smith School of Business; CAFRAL
April 1, 2011
US Census Bureau Center for Economic Studies Paper No. CES-WP-11-11
We examine how firms redraw their boundaries after acquisitions using plant-level data. We find that there is extensive restructuring in a short period following mergers and full-firm acquisitions. Acquirers of full firms sell 27% and close 19% of the plants of target firms within three years of the acquisition. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Retained plants increase in productivity whereas sold plants do not. These results suggest that acquirers restructure targets in ways that exploit their comparative advantage.
Number of Pages in PDF File: 55
Date posted: April 17, 2011
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