The Wage and Employment Consequences of Ownership Change

Kevin Amess · Sourafel Girma · Mike Wright

17 citations0/0 files storedManagerial and Decision Economics

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Corporate Finance and Governance Labor market dynamics and wage inequality Private Equity and Venture Capital

Abstract

This paper provides a comparative examination of the consequences of leveraged buyouts (LBOs) and corporate takeovers on employment growth and wage growth. Employing both difference‐in‐differences combined with propensity score matching and the control function approach, we find evidence that (i) wages remain unchanged after either a private equity (PE)‐backed or non‐PE‐backed LBO, (ii) wages remain unchanged after an unrelated takeover and (iii) related takeovers have negative employment consequences, possibly because of rationalisation. Our evidence does not find strong support for intervention in the market for corporate control on the grounds of protecting employees' welfare. Copyright © 2013 The Authors. Managerial and Decision Economics published by John Wiley & Sons, Ltd.

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References

2001Econometric Analysis of Cross Section and Panel Data 1986Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers 1996Agency costs of free cash flow, corporate finance, and takeovers 1965Mergers and the Market for Corporate Control 1989The effects of management buyouts on operating performance and value 1965The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm 1988Bilateral Monopolies and Incentives for Merger 1989Corporate takeovers: causes and consequences

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2021Activist Hedge Funds and Takeovers: Their Effects on Employment and Performance 2019The Effect of Mergers and Acquisitions on Employees: Wealth Transfer, Gain‐Sharing or Pain‐Sharing?

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