Corporate Employee-Engagement and Merger Outcomes

H. Liang, Luc Renneboog, Cara Vansteenkiste

Research output: Working paperDiscussion paperOther research output

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Abstract

Extending the theories of employee incentives and inalienability of human capital, we investigate the link between a firm’s engagement in employee issues and the returns to shareholders around mergers and acquisitions (M&As) and analyze an international sample of 4,565 M&A deals from 48 countries. We find that stronger employee-engagement—especially in terms of monetary benefits—by the acquiring firm is positively related to shareholder returns in domestic deals, but this positive effect is attenuated in cross-border deals, whereas workforce diversity, training and development, or health and safety do not affect shareholder value. The attenuating effect of cross-border deals is stronger when uncertainty about post-merger labor integration is higher and when economic nationalism in the target’s country is stronger, consistent with an explanation based on the inalienability of human capital and employment policies. Moreover, we find that most effects of employee-engagement on shareholder returns are driven by the acquirer rather than the target, and that they persist in the long run post-merger.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages58
Volume2017-011
Publication statusPublished - 15 Mar 2017

Publication series

NameCentER Discussion Paper
Volume2017-011

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Employees
Shareholders
Employee engagement
Mergers
Cross-border
Human capital
Uncertainty
Economic nationalism
Workforce diversity
Mergers and acquisitions
Shareholder value
Employment policy
Incentives
Diversity training
Training and development
Labor
Health and safety

Keywords

  • employee-engagement
  • labor protection
  • monetary incentives
  • mergers and acquisitions (&As)

Cite this

Liang, H., Renneboog, L., & Vansteenkiste, C. (2017). Corporate Employee-Engagement and Merger Outcomes. (CentER Discussion Paper; Vol. 2017-011). Tilburg: CentER, Center for Economic Research.
Liang, H. ; Renneboog, Luc ; Vansteenkiste, Cara. / Corporate Employee-Engagement and Merger Outcomes. Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper).
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Liang, H, Renneboog, L & Vansteenkiste, C 2017 'Corporate Employee-Engagement and Merger Outcomes' CentER Discussion Paper, vol. 2017-011, CentER, Center for Economic Research, Tilburg.

Corporate Employee-Engagement and Merger Outcomes. / Liang, H.; Renneboog, Luc; Vansteenkiste, Cara.

Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper; Vol. 2017-011).

Research output: Working paperDiscussion paperOther research output

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T1 - Corporate Employee-Engagement and Merger Outcomes

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N2 - Extending the theories of employee incentives and inalienability of human capital, we investigate the link between a firm’s engagement in employee issues and the returns to shareholders around mergers and acquisitions (M&As) and analyze an international sample of 4,565 M&A deals from 48 countries. We find that stronger employee-engagement—especially in terms of monetary benefits—by the acquiring firm is positively related to shareholder returns in domestic deals, but this positive effect is attenuated in cross-border deals, whereas workforce diversity, training and development, or health and safety do not affect shareholder value. The attenuating effect of cross-border deals is stronger when uncertainty about post-merger labor integration is higher and when economic nationalism in the target’s country is stronger, consistent with an explanation based on the inalienability of human capital and employment policies. Moreover, we find that most effects of employee-engagement on shareholder returns are driven by the acquirer rather than the target, and that they persist in the long run post-merger.

AB - Extending the theories of employee incentives and inalienability of human capital, we investigate the link between a firm’s engagement in employee issues and the returns to shareholders around mergers and acquisitions (M&As) and analyze an international sample of 4,565 M&A deals from 48 countries. We find that stronger employee-engagement—especially in terms of monetary benefits—by the acquiring firm is positively related to shareholder returns in domestic deals, but this positive effect is attenuated in cross-border deals, whereas workforce diversity, training and development, or health and safety do not affect shareholder value. The attenuating effect of cross-border deals is stronger when uncertainty about post-merger labor integration is higher and when economic nationalism in the target’s country is stronger, consistent with an explanation based on the inalienability of human capital and employment policies. Moreover, we find that most effects of employee-engagement on shareholder returns are driven by the acquirer rather than the target, and that they persist in the long run post-merger.

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KW - monetary incentives

KW - mergers and acquisitions (&As)

M3 - Discussion paper

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Liang H, Renneboog L, Vansteenkiste C. Corporate Employee-Engagement and Merger Outcomes. Tilburg: CentER, Center for Economic Research. 2017 Mar 15. (CentER Discussion Paper).