Employment Growth Following Takeovers

53 Pages Posted: 25 Jul 2017

See all articles by Karen Geurts

Karen Geurts

KU Leuven - Center for Economic Studies

Johannes Van Biesebroeck

K.U.Leuven; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

We use a comprehensive sample of takeovers in Belgium to show that they are remarkably common and an important part of many firms' growth process. They affect both small and large firms and, over a five-year period, 17 percent of private employment. We estimate the impact of takeovers on employment growth of the merged entity using an empirical framework that explicitly takes into account that mergers are formed by pairs of firms. It allows for post-merger employment outcomes that are heterogeneous and determined jointly by the characteristics of both partners. The average merger is estimated to reduce employment by 8% over a four-year period, but the contraction can be three times as large for some types of mergers, while employment expands for other types.

Keywords: efficiency defense, Firm Dynamics, M&A, Matching, merger

JEL Classification: J23, L23

Suggested Citation

Geurts, Karen and Van Biesebroeck, Johannes, Employment Growth Following Takeovers (July 2017). CEPR Discussion Paper No. DP12167. Available at SSRN: https://ssrn.com/abstract=3008349

Karen Geurts (Contact Author)

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, 3000
Belgium
+32478303283 (Phone)

Johannes Van Biesebroeck

K.U.Leuven ( email )

Naamsestraat 69
B-3000 Leuven
Belgium
+3216326793 (Phone)
+3216326796 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/N07057/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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