The Dynamic Impacts of M&A on Employment in Japan: Using Micro-data from the Financial Statements Statistics of Corporations by Industry

Author: 
Hiroyuki Taguchi
Taichi Yanagawa
Masashi Harita
Description: 
PRI Discussion Paper Series (No.10A-07)
JEL codes: 
Abstract: 
This paper provides empirical evidence on the effects of mergers and acquisitions (M&A) on employment in Japan. It contributes to the literature by capturing dynamic employment impacts of various types of M&A using the latest micro data of firms financial statements. Our main findings are: the dynamic effect of firm acquisitions on a target firms employment proved to be significantly positive mainly in the manufacturing sector, while the dynamic effect of mergers on a remaining firms employment turned out to be significantly negative mainly in the non-manufacturing sector. The switching pattern from negative impact to positive impact on a target firms employment in the dynamic post-acquisition process appeared more clearly in the domestic acquisition case than in the cross-border acquisition case for the manufacturing sector. We speculate that the dynamic positive employment effect of firm acquisitions reflects the efficiency gains by a firms management improvements in the post-acquisition process, whereas the dynamic negative employment effect of mergers implies organizational rationalization in the post-merger process.