Corporate Takeovers and Labor Restructuring

Abstract

Using detailed employer-employee administrative data linked with manually-collected information on merger activity in Brazil, I create input-based measures of technological and organizational changes to examine the relation between firms' human capital composition and mergers. I find that firms with larger shares of high-skilled and innovation-intensive employees participate in mergers. Occupational proximity is an important driver of the transaction incidence. Examining post-merger human capital compositional shifts in target firms, I provide evidence on efficiency-seeking restructuring through technology adoption, investment in innovation and cost synergies. I find support for knowledge transfers, management changes and scale economies as potential mechanisms behind these shifts.

Keywords: Mergers and Acquisitions, Reorganization, Human Capital, Labor Composition, Occupational Overlap

JEL Classification: G34, J2, J3