Employee Turnover in the Spotlight: Evidence from Mergers and Acquisitions

Abstract

Using machine learning on over one million LinkedIn profiles, we construct a comprehensive dataset to examine how demographic composition influences employee turnover following corporate acquisitions. We find that Black, Hispanic, and female employees experience lower increases in turnover rate than White and male employees. These patterns are more pronounced in same-industry acquisitions, but are absent in failed deals, suggesting they are driven by the merger process. The turnover gap is larger for acquirers facing greater legal risk and media scrutiny. Conditional on leaving, Black, Hispanic, and female employees experience worse subsequent labor market outcomes. Moreover, labor cost savings are significantly associated with bidder announcement returns and merger synergies. These results emphasize the role of labor cost savings in driving merger synergies and highlight the role of employee demographics in acquirers' layoff decisions.

Keywords: Mergers and acquisitions, Workforce composition, Labor restructuring, Merger synergies

JEL Classification: G34