Mergers and Acquisitions
Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)
- Chair: Isil Erel, Ohio State University
AbstractCan 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.
Corporate Restructuring and the Mental Health of Employees
AbstractWe study the evolution of workers' mental health around corporate restructurings caused by takeovers. 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 more pronounced for women, "blue-collar" workers, employees with lower innate abilities (IQ and non-cognitive), employees who leave the merging firms in the year of the transaction, and employees in financially distressed target firms. We show that the negative impact on the mental health of the average employee is of similar magnitude as the positive effect of marriage, but smaller than the effect of other marked events in workers' lives, such as divorce and protracted unemployment.
Private Equity in the Hospital Industry
AbstractThis 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.
- G1 - Asset Markets and Pricing