This paper studies the relationship between collective bargaining and mergers and acquisitions activity in 46 countries from the early 1990s. We find that the frequency and volume of mergers and acquisitions within industries increase in countries with powerful labor unions and high coverage of bargaining coordination. Economically, collective bargaining mitigates the negative effect of tighter employment protection legislations on mergers and acquisitions documented in prior works. Further analyses suggest that collective bargaining encourages mergers and acquisitions by reducing employment uncertainty among target firm employees. Our results provide new insights into the real effects of collective bargaining in the context of mergers and acquisitions around the world.

Additional Metadata
Keywords Collective bargaining, Deal completion process, Employment protection legislations, Labor unions, Mergers and acquisitions, Offer premium, Synergy gains
Persistent URL dx.doi.org/10.1016/j.jbankfin.2018.11.010, hdl.handle.net/1765/112523
Journal Journal of Banking & Finance
Citation
Ahmad, M.F. (Muhammad Farooq), & Lambert, T. (Thomas). (2019). Collective bargaining and mergers and acquisitions activity around the world. Journal of Banking & Finance, 99, 21–44. doi:10.1016/j.jbankfin.2018.11.010