Mergers and Acquisitions
Paper Session
Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)
- Chair: Isil Erel, Ohio State University
Misconduct Synergies
Abstract
Can M&A improve employee misconduct? We use the investment advisory industry as a laboratory to test whether there are misconduct synergies in M&A. Consistent with synergies, we find that employee misconduct drops by 23 percent following merger events. However, contrary to the idea that better-performing firms tend to purchase poor-performing ones, we find that both targets and acquirers have better misconduct records than the industry’s average firm. Moreover, we find evidence of assortative matching on misconduct. This suggests complementarities in misconduct (consistent with Rhodes-Kropf and Robinson (2008)). Indeed, target firm employees have better misconduct records on average, but the sensitivity of employment sep-aration to misconduct also increases post-merger, suggesting improved disciplinary mechanisms.How Do Acquisitions Affect the Mental Health of Employees?
Abstract
Using employer-employee level data linked to individual health records, we document that the incidence of stress, anxiety, depression, psychiatric medication usage, and even suicide increase following acquisitions. These effects are prevalent among employees from both targets and acquirers, in weak as well as in growing, profitable firms. Employees who experience negative career developments within the merging firms, 'blue-collar' workers, and employees with lower cognitive and non-cognitive skills are most affected. A variety of tests address endogeneity concerns, including an analysis exploiting failed mergers. Our findings point to mental illness as a significant non-pecuniary cost of acquisitions.Private Equity in the Hospital Industry
Abstract
This paper studies the growing presence of private equity (PE) firms as acquirers in the hospital industry. We examine employment, operational efficiency and patient satisfaction outcomes at hospitals acquired by PE firms. While there are significant employment cuts at target hospitals, the proportion of physicians and nurses in the total workforce of the hospital increases when the acquirer is a publicly traded PE backed hospital. Consistent with reduction in overall employment, target hospitals exhibit a significant reduction in their total wage bill and in operating costs per treated patient. Reduction in employment, total wages and operating costs are also observed in target hospitals acquired by non PE acquirers, although non PE acquirers are not associated with an increase in the proportion of skilled employees. In line with the observation that PE firms increase the proportion of skilled employees, patient satisfaction outcomes do not worsen (or improve along some dimensions) at hospitals acquired by publicly traded PE backed hospitals whereas they significantly worsen at hospitals acquired by non PE acquirers. Overall, our paper provides a comprehensive look at the role of PE acquirers in the hospital industry, and documents nuanced differences between PE and non PE acquirers, as well as between PE backed acquirers with and without access to public capital markets.Discussant(s)
Victor Lyonnet
,
Ohio State University
Shan Ge
,
New York University
Elena Simintzi
,
University of North Carolina-Chapel Hill
Katharina Lewellen
,
Dartmouth College
JEL Classifications
- G1 - Asset Markets and Pricing