An Empirical Analysis on Hostile vs. Friendly Acquisition and Effects on Employment

Abstract

This paper provides empirical evidence on the impact of friendly and hostile acquisitions on the firm employment and labour workforce in the United Kingdom using a specific collected database for the period of 1988-2011 and UK quoted companies. The understanding of this paper is to provide results in terms of recognizing whether hostile acquisitions are harmful to employment and decrease the demand for labour. The results exhibits otherwise, as it does not find any evidence to support the theory that hostile companies are more detrimental to the employment in comparison to friendly acquisitions. However, the paper does find descriptive statistics to what changes during and after the merger events, more specifically, in the labour productivity, real output, employment and wage rate variables. The aforementioned variables do suffer in both types of mergers and acquisitions except for wage rate. Conclusively, hostile and friendly acquisitions do not display any significant relationship with the changes in labour demand and employment, thereby, going against the popular belief that hostile takeovers reduce employment and job loss.