Cross-Border Acquisitions and Employee-Engagement
CentER Discussion Paper Series No. 2017-038
57 Pages Posted: 22 Sep 2017
Date Written: September 21, 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
JEL Classification: G34, M14, J24
Suggested Citation: Suggested Citation