Cross-Border Acquisitions and Employee-Engagement
61 Pages Posted: 3 Mar 2017 Last revised: 1 Aug 2017
Date Written: July 25, 2017
We provide novel evidence that a firm’s engagement in employee-related issues explains part of the value difference between its domestic and cross-border takeovers. An acquirer’s investment in employee relations is positively related to the firm’s performance when acquiring domestically, but labor-related frictions reverse this effect when acquiring a foreign target. The results cannot be explained by country-level labor regulation but are consistent with the notion that labor-related frictions exist that prohibit firms from efficiently transforming monetary incentives in higher shareholder value when acquiring a foreign target firm.
Keywords: employee-engagement, labor protection, monetary incentives, cross-border mergers and acquisitions (M&As)
JEL Classification: G34, M14, J24
Suggested Citation: Suggested Citation