The Effect of M&A on Employee Performance : An empirical study on post-MBA employee performance in private Norwegian target companies

Abstract

This paper analyses post-M&A employee performance for private Norwegian target companies using accounting data between 2007 and 2016. We have created an algorithm which identifies ownership changes in firms from accounting data. Our model is based on the Cobb-Douglas productivity function to measure firm productivity, and utilizes Propensity Score Matching (PSM) to control for confounding variables. Additionally, we research if the effect of M&A are different based on labor size or sector. As a robustness test we use Nearest Neighbour matching combined with a Difference-In-Difference (DD) analysis to control for possible bias in the PSM analyses. Our results conclude that M&As do not have an effect on employee performance in Norwegian private companies. Furthermore, results indicate a negative effect on firm performance post-M&A. We neither find any reliable differences on employee performance from labor size nor sector. However, we find that the firm performance for the companies with the largest labor force, in the retail industry, and in the remaining sectors are negatively affected post-M&A. The DD analysis mostly support the PSM findings on employee performance and strengthens the validity of our findings. However, we cannot exclude potential confounding of the firm performance outcome variable.