Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry

68 Pages Posted: 16 Feb 2014 Last revised: 19 May 2022

See all articles by Serguey Braguinsky

Serguey Braguinsky

Carnegie Mellon University - Department of Social and Decision Sciences

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration

Tetsuji Okazaki

University of Tokyo - Faculty of Economics

Chad Syverson

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Date Written: February 2014

Abstract

We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization--differences which reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.

Suggested Citation

Braguinsky, Serguey and Ohyama, Atsushi and Okazaki, Tetsuji and Syverson, Chad, Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry (February 2014). NBER Working Paper No. w19901, Available at SSRN: https://ssrn.com/abstract=2396727

Serguey Braguinsky (Contact Author)

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration ( email )

Kita-ku Kita 9 Nishi 7
Sapporo, Hokkaido, 060
Japan

Tetsuji Okazaki

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

Chad Syverson

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
561
PlumX Metrics