Collective Bargaining and Mergers and Acquisitions Activity around the World

53 Pages Posted: 2 Aug 2015 Last revised: 6 Jul 2019

See all articles by Muhammad Farooq Ahmad

Muhammad Farooq Ahmad

SKEMA Business School – Université Côte d'Azur

Thomas Lambert

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

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Date Written: November 11, 2018

Abstract

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

Ahmad, Muhammad Farooq and Lambert, Thomas, Collective Bargaining and Mergers and Acquisitions Activity around the World (November 11, 2018). Journal of Banking and Finance, 2019, 99, 21-40., Available at SSRN: https://ssrn.com/abstract=2638387 or http://dx.doi.org/10.2139/ssrn.2638387

Muhammad Farooq Ahmad

SKEMA Business School – Université Côte d'Azur ( email )

Campus de Lille, Avenue Willy Brandt,
Lille, 59777
France

HOME PAGE: http://sites.google.com/site/mfarooqahmad85

Thomas Lambert (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.sites.google.com/site/lambertthom

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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