TY - JOUR
T1 - Firing frictions and the U.S. mergers and acquisitions market
AU - Chatt, Robert
AU - Gustafson, Matthew
AU - Welker, Adam
N1 - Funding Information:
We wish to thank Jess Cornaggia, Laura Field, Andrey Golubov, David Haushalter, Peter Iliev, Jason Kotter, Chris Muscarella, Tim Simin, participants at the 2016 Financial Management and World Finance Association Meetings, seminar participants at the Pennsylvania State University, and the editor and anonymous referees for their helpful comments and discussions.
Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/7
Y1 - 2021/7
N2 - 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in total mergers and acquisitions (M&A) dollar volume and average M&A size as well as an immediate increase in withdrawn deals.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.
AB - 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in total mergers and acquisitions (M&A) dollar volume and average M&A size as well as an immediate increase in withdrawn deals.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.
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U2 - 10.1016/j.jbankfin.2021.106139
DO - 10.1016/j.jbankfin.2021.106139
M3 - Article
AN - SCOPUS:85104709743
SN - 0378-4266
VL - 128
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
M1 - 106139
ER -