This study draws on strategic factor market theory and argues that acquirers' decisions regarding whether to bid for a firm reflect their expectations about employee departure from the firm post-acquisition, suggesting a negative relationship between the anticipated employee departure from a firm and the likelihood of the firm becoming an acquisition target. Using a natural experiment and a difference-in-differences approach, we find causal evidence that constraints on employee mobility raise the likelihood of a firm becoming an acquisition target. The causal effect is stronger when a firm employs more knowledge workers in its workforce and when it faces greater in-state competition; by contrast, the effect is weaker when a firm is protected by a stronger intellectual property regime that mitigates the consequences of employee mobility . Copyright © 2014 John Wiley & Sons, Ltd."> This study draws on strategic factor market theory and argues that acquirers' decisions regarding whether to bid for a firm reflect their expectations about employee departure from the firm post-acquisition, suggesting a negative relationship between the anticipated employee departure from a firm and the likelihood of the firm becoming an acquisition target. Using a natural experiment and a difference-in-differences approach, we find causal evidence that constraints on employee mobility raise the likelihood of a firm becoming an acquisition target. The causal effect is stronger when a firm employs more knowledge workers in its workforce and when it faces greater in-state competition; by contrast, the effect is weaker when a firm is protected by a stronger intellectual property regime that mitigates the consequences of employee mobility . Copyright © 2014 John Wiley & Sons, Ltd."> This study draws on strategic factor market theory and argues that acquirers' decisions regarding whether to bid for a firm reflect their ex">
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How anticipated employee mobility affects acquisition likelihood: Evidence from a natural experiment

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  • Kenneth A. Younge
  • Tony W. Tong
  • Lee Fleming
Abstract
type="main" xml:id="smj2237-abs-0001"> This study draws on strategic factor market theory and argues that acquirers' decisions regarding whether to bid for a firm reflect their expectations about employee departure from the firm post-acquisition, suggesting a negative relationship between the anticipated employee departure from a firm and the likelihood of the firm becoming an acquisition target. Using a natural experiment and a difference-in-differences approach, we find causal evidence that constraints on employee mobility raise the likelihood of a firm becoming an acquisition target. The causal effect is stronger when a firm employs more knowledge workers in its workforce and when it faces greater in-state competition; by contrast, the effect is weaker when a firm is protected by a stronger intellectual property regime that mitigates the consequences of employee mobility . Copyright © 2014 John Wiley & Sons, Ltd.

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  • Kenneth A. Younge & Tony W. Tong & Lee Fleming, 2015. "How anticipated employee mobility affects acquisition likelihood: Evidence from a natural experiment," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 686-708, May.
    • Handle: RePEc:bla:stratm:v:36:y:2015:i:5:p:686-708
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