Post-Merger Restructuring and the Boundaries of the Firm

55 Pages Posted: 17 Apr 2011

See all articles by Vojislav Maksimovic

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Nagpurnanand Prabhala

The Johns Hopkins Carey Business School

Multiple version iconThere are 3 versions of this paper

Date Written: April 1, 2011

Abstract

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.

Suggested Citation

Maksimovic, Vojislav and Phillips, Gordon M. and Prabhala, Nagpurnanand, Post-Merger Restructuring and the Boundaries of the Firm (April 1, 2011). US Census Bureau Center for Economic Studies Paper No. CES-WP-11-11, Available at SSRN: https://ssrn.com/abstract=1809916 or http://dx.doi.org/10.2139/ssrn.1809916

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business ( email )

Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)

HOME PAGE: http://scholar.rhsmith.umd.edu/vmax/home

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nagpurnanand Prabhala

The Johns Hopkins Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States
+1 410 234 4532 (Phone)

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