Assessing the Effects of Mergers and Acquisitions on Firm Performance, Plant Productivity, and Workers: New Evidence from Matched Employer-Employee Data

Strategic Management Journal, Forthcoming

30 Pages Posted: 14 Nov 2009

See all articles by Donald S. Siegel

Donald S. Siegel

Arizona State University

Kenneth L. Simons

Rensselaer Polytechnic Institute (RPI) - Department of Economics

Date Written: November 12, 2009

Abstract

Empirical studies of mergers and acquisitions typically focus on firm-level financial performance. In contrast, we use human capital theory to model these events as transactions that simultaneously have cross-level, real effects on workers, plants, and firms. Our empirical analysis is based on longitudinal, linked employer-employee data for virtually all Swedish manufacturing firms and employees. We find that mergers and acquisitions significantly enhance plant productivity, although they also result in the downsizing of establishments and firms. Firm performance does not decline in aftermath of these transactions. We conclude that mergers and acquisitions constitute a mechanism for improving the sorting and matching of plants and workers to more efficient uses.

Keywords: Mergers and Acquisitions, Human Capital, Total Factor Productivity, Downsizing, Compensation, Matched Employer-Employee Data

JEL Classification: G34, D24, C81

Suggested Citation

Siegel, Donald S. and Simons, Kenneth L., Assessing the Effects of Mergers and Acquisitions on Firm Performance, Plant Productivity, and Workers: New Evidence from Matched Employer-Employee Data (November 12, 2009). Strategic Management Journal, Forthcoming , Available at SSRN: https://ssrn.com/abstract=1505004

Donald S. Siegel (Contact Author)

Arizona State University ( email )

411 North Central
Phoenix, AZ 85004
United States
6024961101 (Phone)

Kenneth L. Simons

Rensselaer Polytechnic Institute (RPI) - Department of Economics ( email )

110 8th Street
Troy, NY 12180
United States
518-276-3296 (Phone)
518-276-2235 (Fax)

HOME PAGE: http://www.rpi.edu/~simonk/

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