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

48 Pages Posted: 26 Jul 2014 Last revised: 20 Jun 2015

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: January 1, 2014

Abstract

We explore how changes in ownership affect the productivity and profitability of producers. Using detailed data from the Japanese cotton spinning industry at the turn of the last century, we find that acquired firms’ production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition. They were much less profitable, however, due to higher inventory levels and lower capacity utilization — differences that reflected problems in managing the uncertainties of demand. After acquisitions, less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels.

Suggested Citation

Braguinsky, Serguey and Ohyama, Atsushi and Okazaki, Tetsuji and Syverson, Chad, Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry (January 1, 2014). Chicago Booth Research Paper No. 14-26. Available at SSRN: https://ssrn.com/abstract=2471296 or http://dx.doi.org/10.2139/ssrn.2471296

Serguey Braguinsky

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 (Contact Author)

University of Chicago Booth School of Business ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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