GEP Research Paper 00/09
Do Hostile Mergers Destroy Jobs?
Martin Conyon, Sourafel Girma, Steve Thompson and Peter Wright
This paper was subsequently published in the Journal of Economic Behavior and Organization, Vol. 45, Issue 4, pp.427-440, 2001
Abstract
This paper provides a systematic empirical analysis of the employment effects of hostile takeovers in the United Kingdom for the period 1983-1996. It finds no evidence for distinguishing between friendly and hostile acquisitions in terms of their impact on labour demand. Indeed, each type of transaction appears to have an immediate negative impact on labour demand, equivalent to about 7.5 percent of the pre-merger level. However, the paper does find that the absolute number of employees falls substantially, along with output, in the hostile merger case alone. This appears to be the consequence of a high level of post-merger divestment that distinguishes hostile transactions.
Issued in May 2000.
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