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Workforce reductions and post-merger operating performance: The role of corporate governance

Malikov, Kamran and Demirbag, Mehmet and Kuvandikov, Azimjon and Manson, Stuart (2021) 'Workforce reductions and post-merger operating performance: The role of corporate governance.' Journal of Business Research, 122. 109 - 120. ISSN 0148-2963

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Abstract

This paper examines whether corporate governance mechanisms influence the association between workforce reductions and post-acquisition operating performance. Using UK-based acquisitions, it is found that there is a negative relationship between employment reductions and post-acquisition operating performance. However, the results show that this negative association becomes positive when the board has a substantial equity ownership. This suggests acquirers with higher levels of board ownership make better quality layoff decisions and, thereby, achieve operating performance improvement subsequent to workforce reductions. The results also indicate that larger board size and greater board independence decrease the negative effect of acquisition-related workforce reductions on subsequent operating performance. Further, our results show that CEO duality increases the negative relationship between employment reductions and post-acquisition operating performance. Overall, the results suggest that corporate governance plays an important role in understanding the performance effect of acquisition-related workforce reductions.

Item Type: Article
Uncontrolled Keywords: workforce reductions; post-acquisition operating performance; corporate governance; merger and acquisition, Workforce reductions, Post-acquisition operating performance, Corporate governance, Merger and acquisition
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
Depositing User: Elements
Date Deposited: 23 Sep 2020 14:56
Last Modified: 08 Mar 2021 13:21
URI: http://repository.essex.ac.uk/id/eprint/28583

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