Employee Rights and Acquisitions

57 Pages Posted: 10 Sep 2014 Last revised: 9 Oct 2015

See all articles by Kose John

Kose John

New York University (NYU) - Department of Finance

Anzhela Knyazeva

Independent; New York University (NYU) - Leonard N. Stern School of Business

Diana Knyazeva

Independent

Date Written: October 2015

Abstract

This paper examines the outcomes and characteristics of corporate acquisitions from the perspective of stakeholder-shareholder agency conflicts. Using state variation in labor protections, we find that acquirers with strong labor rights experience lower announcement returns. Combined acquirer and target announcement returns are also lower in the presence of strong labor rights. Our findings remain statistically and economically significant after we control for a range of deal, firm, industry and state characteristics and explore various channels for the labor rights effect. Overall, the evidence indicates that employee-shareholder conflicts of interest reduce shareholder gains from acquisitions.

Keywords: Mergers and acquisitions, Firm value, Employees, Agency conflicts

JEL Classification: G34

Suggested Citation

John, Kose and Knyazeva, Anzhela and Knyazeva, Diana, Employee Rights and Acquisitions (October 2015). Journal of Financial Economics, Vol. 118, Issue 1, pp. 49-69. Available at SSRN: https://ssrn.com/abstract=2493935 or http://dx.doi.org/10.2139/ssrn.2493935

Kose John

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0337 (Phone)
212-995-4233 (Fax)

Anzhela Knyazeva (Contact Author)

Independent ( email )

No Address Available

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Diana Knyazeva

Independent ( email )

No Address Available

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