Cross-Border Acquisitions and Employee-Engagement

Hao Liang, Luc Renneboog, Cara Vansteenkiste

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Abstract

We provide novel evidence that a firm’s engagement in employee-related issues explains part of the value difference between its domestic and cross-border takeovers. An acquirer’s investment in employee relations is positively related to the firm’s performance when acquiring domestically, but labor-related frictions reverse this effect when acquiring a foreign target. The results cannot be explained by country-level labor regulation but are consistent with the notion that labor-related frictions exist that prohibit firms from efficiently transforming monetary incentives in higher shareholder value when acquiring a foreign target firm.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages57
Volume2017-038
Publication statusPublished - 21 Sept 2017

Publication series

NameCentER Discussion Paper
Volume2017-038

Keywords

  • employee-engagement
  • labor protection
  • Monetary incentives
  • Cross-Border Mergers and Acquisitions

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