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Cause and effect relationship between post-merger operating performance changes and workforce adjustments

Kuvandikov, A. (2010) Cause and effect relationship between post-merger operating performance changes and workforce adjustments. Working Paper. Department of Management Studies, University of York

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Abstract

Prior empirical research provides substantial evidence showing that mergers and acquisitions lead to operating performance decline (Ghosh, 2001). At the same time such transactions involve workforce reductions, as reported in the public media. However, systematic empirical evidence on the association between operating performance and workforce adjustments is inconclusive. On the one hand workforce reductions may be undertaken to improve efficiency and firm profitability (Cascio et al., 1997) or to arrest further performance deterioration. On the other, post-takeover layoffs may be undertaken to create shareholder value and to regain premiums paid to targets. Consequently, it is suggested that such layoffs destroy the human capital of acquired firms and thereby negatively affect firm performance post-merger (Krishnan et al., 2007). Thus, the answers to (1) whether post-takeover performance decline leads to workforce reductions and (2) whether such layoffs positively or negatively affect firm performance are unknown. This chapter aims to provide new empirical evidence on these two questions. Empirical evidence on these questions would clarify whether post-merger labour management decisions are made to further enhance efficiency and firm profitability.

Item Type: Monograph (Working Paper)
Academic Units: The University of York > The York Management School
Depositing User: Repository Administrator York
Date Deposited: 24 Sep 2010 17:38
Last Modified: 17 Oct 2013 15:35
Status: Published
Publisher: Department of Management Studies, University of York
Refereed: No
Related URLs:
URI: http://eprints.whiterose.ac.uk/id/eprint/11239

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