Prof. Kenneth A. Younge (Leeds School of Business)

Programm

• Datum: 31.05.2011
  Zeit: 17:00 - 18:15
  Ort: Kaulbachstr. 45, room E004

How anticipated employee mobility affects acquisition likelihood: Evidence from a natural experiment

Extant M&A research has focused on how acquiring firms may use acquisitions to source human talents from target companies. In this study, we argue that acquirers incorporate expectations about potential employee mobility in a firm into their decisions regarding whether to bid for the firm, suggesting a negative relationship between the expected employee mobility in a firm and the likelihood of the firm being an acquisition target.

We exploit an inadvertent change in the enforcement of non-compete agreements in Michigan as an observable, exogenous source of variation in employee mobility. Using a difference-in-differences approach and the population of listed firms in Michigan and a set of comparison states, we find causal evidence that constraints on employee mobility raise the likelihood that a Michigan firm becomes an acquisition target. We also find that the effect is stronger when the firm is exposed to greater risks of employee mobility, such as when the firm employs more knowledge workers in its work force and when it faces greater instate competition; by contrast, the effect is weaker when the firm is protected by a stronger intellectual property regime that can mitigate knowledge loss due to employee mobility.