Employees and the Market for Corporate Control

49 Pages Posted: 19 Mar 2012 Last revised: 18 Apr 2015

Date Written: January 1, 2015

Abstract

We find that firms that treat their employees better are less likely to be acquired. The shareholders of employee-friendly targets also receive lower premiums and smaller share of the surplus created by the deal. We also show that bidders tend to improve their employee policy following the acquisition of R&D-intensive targets. Furthermore, the improvement of employee policy is stronger when bidders increase their R&D expenditures in the new firm. The most likely explanation of our results is the importance of human capital in the production process. The agency conflict between managers and shareholders does not seem to be an important factor for employee policy.

Keywords: employee policy, mergers and acquisitions

JEL Classification: G34, J50

Suggested Citation

Macias, Antonio J. and Pirinsky, Christo Angelov, Employees and the Market for Corporate Control (January 1, 2015). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2024412 or http://dx.doi.org/10.2139/ssrn.2024412

Antonio J. Macias (Contact Author)

Baylor University ( email )

Waco, TX 76798
United States

Christo Angelov Pirinsky

University of Central Florida ( email )

College of Business Administration/Finance
PO Box 161400
Orlando, FL FL 32816
United States
407-823-5962 (Phone)

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