Firing frictions and the U.S. mergers and acquisitions market

Robert Chatt, Matthew Gustafson, Adam Welker

Research output: Contribution to journalArticlepeer-review

Abstract

Following the adoption of state laws that increase firing costs, there is an immediate and persistent 30% reduction in total mergers and acquisitions (M&A) dollar volume and average M&A size as well as an immediate increase in withdrawn deals. Firing costs do not affect M&A announcement returns, but there are negative returns surrounding the announcement of state laws that increase firing frictions, especially for future M&A targets. These findings suggest that post-merger employee turnover is a first-order source of value for U.S. mergers.

Original languageEnglish (US)
Article number106139
JournalJournal of Banking and Finance
Volume128
DOIs
StatePublished - Jul 2021

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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