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Merger Activity and Employment: Evidence from the UK Mutual Sector

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Abstract

This paper approaches the performance consequences of mergers from a new direction; namely by analysing their impact on the acquiring firm's demand for labour. It employs a dynamic labour demand model, with an unbalanced panel of UK financial mutuals over the period 1981–1993. The data relate strictly to core financial intermediation activity and are thus particularly appropriate for the paper's purposes. The results are strongly supportive of an efficiency-enhancing interpretation of merger activity. A significant positive initial impact on the acquirer's demand for labour is followed by three years of significant negative effects, a result consistent with the acquisition and subsequent digestion of less efficient targets.

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Authors and Affiliations

  1. Department of Economics, University of Nottingham, Nottingham, NG7 2RD, UK

    Michelle Haynes

  2. Department of Economics, University of Leicester, Leicester, LE1 7RH, UK

    Steve Thompson

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  1. Michelle Haynes
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  2. Steve Thompson
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Haynes, M., Thompson, S. Merger Activity and Employment: Evidence from the UK Mutual Sector. Empirica 26, 39–54 (1999). https://doi.org/10.1023/A:1006963701430

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