Misconduct Synergies
64 Pages Posted: 14 Oct 2021 Last revised: 9 Sep 2023
Date Written: October 13, 2021
Abstract
Do corporate control transactions discipline the labor force? Consistent with synergies, we find that new disclosures of employee misconduct in the investment advisory industry drop by between 28 and 37% following mergers. Both targets and acquirers have better premerger misconduct records than the industry’s average firm and, within the subsample of merging firms, there is assortative matching on misconduct. Merger events facilitate further reductions in misconduct through separations of target firm employees with high misconduct. Many of these employees remain in the industry, suggesting that mergers play an important role in the redistribution of misconduct across firms.
Keywords: Investment Advisers, M&A, Synergies, Broker Misconduct, BrokerCheck
JEL Classification: G24, G30, G34, M14
Suggested Citation: Suggested Citation