Post-Merger Restructuring of the Labor Force

96 Pages Posted: 5 May 2021 Last revised: 23 Jun 2021

See all articles by Britta Gehrke

Britta Gehrke

University of Rostock - Faculty of Business Administration, Economics and Social Sciences; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); IZA Institute of Labor Economics

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Stefan Obernberger

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

Christoph Schneider

Universität Münster

Date Written: May 14, 2021

Abstract

We study the restructuring of the labor force after mergers and acquisitions. Overall restructuring is large. Net employment of targets declines by more than half within two years after acquisitions relative to a matched sample, and is concentrated in targets that close all establishments. There is a substantial increase in employee turnover. We place our analysis within a framework in which acquirers seek growth options from targets and provide managerial capabilities to organize production more efficiently. Consistent with this framework, we show that growth and turnover are both higher for managers, and that firms become more hierarchical if they grow and if they become more diversified. Acquirers have a better-educated, better-paid, and more qualified workforce than targets, and they adapt the workforce by hiring new employees who are much younger and less expensive. Mergers create internal labor markets, which are more active if firms have more managerial capacities. However, most hiring is external, especially for managers.

Keywords: M&A, Restructuring, Employment, Internal Labor Markets

JEL Classification: G30, G34, J24, J31, M51

Suggested Citation

Gehrke, Britta and Maug, Ernst G. and Obernberger, Stefan and Schneider, Christoph, Post-Merger Restructuring of the Labor Force (May 14, 2021). European Corporate Governance Institute – Finance Working Paper No. 753/2021, Available at SSRN: https://ssrn.com/abstract=3838865 or http://dx.doi.org/10.2139/ssrn.3838865

Britta Gehrke

University of Rostock - Faculty of Business Administration, Economics and Social Sciences ( email )

Ulmenstr. 69
Rostock, 18057
Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Regensburger Str. 104
Nuremberg, 90478
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ernst G. Maug (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Christoph Schneider

Universität Münster ( email )

Universitätsstraße 14-16
Münster, 48143
Germany
+492518322088 (Phone)

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