Collective Bargaining and Mergers and Acquisitions Activity around the World

This paper studies the relationship between collective bargaining and mergers and acquisitions activity in 46 countries from the early 1990s. We find that the frequency and volume of mergers and acquisitions within industries increase in countries with powerful labor unions and high coverage of bargaining coordination. Economically, collective bargaining mitigates the negative effect of tighter employment protection legislations on mergers and acquisitions documented in prior works. Further analyses suggest that collective bargaining encourages mergers and acquisitions by reducing employment uncertainty among target firm employees. Our results provide new insights into the real effects of collective bargaining in the context of mergers and acquisitions around the world.

Keywords: collective bargaining, employment protection legislations, labor unions, mergers and acquisitions, synergy gains, deal completion process, offer premium

JEL Classification: G30, G34, J51, K31

Suggested Citation: Suggested Citation

Ahmad, Muhammad Farooq and Lambert, Thomas, Collective Bargaining and Mergers and Acquisitions Activity around the World (November 11, 2018). 2016 Financial Markets and Corporate Governance, Available at SSRN: https://ssrn.com/abstract=2625952 or http://dx.doi.org/10.2139/ssrn.2625952