Do Wages Rise or Fall Following Merger?

25 Pages Posted: 16 May 2004

See all articles by Martin Conyon

Martin Conyon

University of Pennsylvania - The Wharton School; Bentley University

Sourafel Girma

Nottingham University Business School

Steve Thompson

University of Leicester - Department of Economics

Peter W Wright

University of Sheffield - Department of Economics

Date Written: August 2003

Abstract

This paper provides a systematic empirical analysis of the effects of merger and acquisition activity on profitability and firm level employee remuneration in the United Kingdom, using a specially constructed database for the period 1979-1991. It finds that both profitability and wages rise following acquisition, and firms that merge within the same industry division experience larger increases in profitability and pay their workers higher wages than those engaged in unrelated acquisitions. This is, in part, the result of an increase in the efficiency with which labour is used following related acquisition.

Keywords: Mergers, acquisitions, panel data, wages, profits, employment

JEL Classification: J23, L23

Suggested Citation

Conyon, Martin and Girma, Sourafel and Thompson, Steve and Wright, Peter W, Do Wages Rise or Fall Following Merger? (August 2003). Available at SSRN: https://ssrn.com/abstract=546962 or http://dx.doi.org/10.2139/ssrn.546962

Martin Conyon (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Steve Thompson

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom
+44 116 252 2897 (Phone)

Peter W Wright

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
UNITED KINGDOM

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