Are Cross-Border Acquisitions Enemy of Labor? An Examination of Employment and Productivity Effects

Oldford, Erin; Otchere, Isaac

doi:10.2139/ssrn.2557195

Cited by 7 publications

(11 citation statements)

References 41 publications

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“…Simulations of labor-market adjustments because of a trade-related fall in manufacturing goods prices indicate that the share of informally employed workers rises after liberalization; however, this is attributed to entry into the labor market by the previously idle workforce. Oldford and Otchere (2016) indicate that targets of cross-border acquisitions are less productive than those of domestic acquisitions before the takeover. However, subsequent to the acquisition, their productivity levels improve significantly and they increase wages (more than domestic targets), although they reduce employment levels.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

Does accounting details play an allocative role in predicting macroeconomic indicators? Evidence of Bayesian and classical econometrics in Iran

Salehi

Gah

Akbari

et al. 2020

IJOA

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Purpose The purpose of this study is to analyze the predictability of firm level data for determining macroeconomic indicators such as unemployment. Design/methodology/approach This study uses quarterly GDP and unemployment data manually collected from the Statistical Center of Iran (SCI). Accounting numbers are also collected from the Tehran Stock Exchange library for the 2004-2015 period. Dispersion of earnings growth provides related data about labour reallocation, unemployment change and finally aggregate output. To summarize, this study attempts to examine the effect of these variables using classical and Bayesian approaches. Findings At a firm level, our results suggest that sectoral shift in previous years is likely to increase labour reallocation in subsequent years. At the macro level, the results reveal that dispersion of earnings growth and labour reallocation has a negative and positive impact on unemployment changes, respectively. However, the study suggests no significant relationship between stock return and unemployment changes. Consequently, we determine that the real estimates of macroeconomic indicators have predictive power because nominal estimates are not statistically associated with firm-level details. Finally, the results obtained from classical and Bayesian approaches suggest similar findings, thus confirming the robustness of our conclusions. Note that, based on Bayesian approach, the nominal reallocation has predictive power in unemployment rate. Originality/value The study is the first conducted in a developing country and the results provide important insight into current line of accounting literature.

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Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

Does accounting details play an allocative role in predicting macroeconomic indicators? Evidence of Bayesian and classical econometrics in Iran

Salehi

Gah

Akbari

et al. 2020

IJOA

View full text Add to dashboard Cite

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“…Ramírez-Alesón and Espitia-Escuer (2001) reported that increased international diversification is associated with performance improvements. Oldford and Otchere (2016) and Almeida (2003) find that there is a wage premium involved in cross-border acquisitions, as foreign bidders typically increase wages after the acquisition. The increase in wages is typically accompanied by an increase in efficiency and productivity levels (Oldford & Otchere, 2016).…”

Section: Economic Motives For Cross-border Acquisitionsmentioning

confidence: 99%

“…Oldford and Otchere (2016) and Almeida (2003) find that there is a wage premium involved in cross-border acquisitions, as foreign bidders typically increase wages after the acquisition. The increase in wages is typically accompanied by an increase in efficiency and productivity levels (Oldford & Otchere, 2016). Andre et al (2004) find that cross-border deals in Canada perform poorly in the three years following acquisition, and Black, Carnes, Jandik, and Henderson (2007) report similar results for US acquirers.…”

Section: Economic Motives For Cross-border Acquisitionsmentioning

confidence: 99%

“…Some studies report positive announcement returns (e.g., Chari, Ouimet, & Tesar, ), other studies report negative returns (e.g., Danbolt, ), while another group of studies report insignificant abnormal returns (e.g., Campa & Hernando, ). Studies investigating the post‐acquisition performance also report mixed evidence, with some studies reporting improved performance for the firms in the long run (e.g., Oldford & Otchere, ), and others reporting underperformance (e.g., Gugler, Mueller, Yurtoglu, & Zulehner, ). There is little research on whether cross‐border acquisitions hinder or promote firm‐level competitiveness in the host country.…”

Section: Introductionmentioning

confidence: 99%

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Cross‐border acquisitions and host country competitiveness

Otchere

Oldford

2018

Business Fin & Account

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We investigate the competitive effects of cross‐border takeovers and find that following the acquisitions, the competitiveness of cross‐border targets improves. The results for industry rivals, however, are mixed. Rivals of targets of cross‐border acquisitions experience improvements in their competitive position in the long term, while at the same time, their growth and market share suffer. These acquisitions lead to a shifting of market share from rivals to cross‐border targets, which is suggestive of increased industry concentration. Cross‐border acquisitions also enhance the host country's financial market development, and lead to increases in innovation in the host country. Overall, our results cast some doubts on the often pessimistic view of foreign takeovers held by some politicians that these deals are bad for the host country.

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“…Canadian cross‐border M&A activities have been increasing over time, including the Canadian takeovers of well‐established foreign firms (Oldford and Otchere, ). Based on their literature review, Xie et al () conclude that the United States, United Kingdom, Japan, France, and Canada are the top five acquiring firm countries in the market for cross‐border outbound deals and that the United States, United Kingdom, Canada, the Netherlands, and Germany are the top five target firm countries for cross‐border inbound acquisitions.…”

Section: Manda Researchmentioning

confidence: 99%

Firms in Transition: A Review of the Venture Capital, IPO, and M&A Literature

Cormier

Coulombe

Gutiérrez

et al. 2018

Accounting Perspectives

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A key area of research focuses on firms in transition, particularly those going public via initial public offerings, those growing via venture capital infusions, and acquirers and targets in merger and acquisition deals. In this article, we provide a review of research regarding firms in transition, with a primary focus on accounting‐related research. As part of our review we include key contributions both in the Canadian context and internationally, and discuss areas to be considered for future research.

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Are Cross-Border Acquisitions Enemy of Labor? An Examination of Employment and Productivity Effects

Cited by 7 publications

References 41 publications

Does accounting details play an allocative role in predicting macroeconomic indicators? Evidence of Bayesian and classical econometrics in Iran

Does accounting details play an allocative role in predicting macroeconomic indicators? Evidence of Bayesian and classical econometrics in Iran

Cross‐border acquisitions and host country competitiveness

Firms in Transition: A Review of the Venture Capital, IPO, and M&A Literature

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