PRODUCTIVITY AND ACQUISITIONS IN U.S. COAL MINING
December 1999
Working Paper Number:
CES-99-17
Abstract
This paper extends the literature on the productivity incentives for mergers and acquisitions. We develop a stochastic matching model that describes the conditions under which a coal mine will change owners. This model suggests two empirically testable hypotheses: i. acquired mines will exhibit low productivity prior to being acquired relative to non-acquired mines and ii. extant acquired mines will show post-acquisition productivity improvements over their pre-acquisition productivity levels. Using a unique micro data set on the universe of U.S. coal mines observed from 1978 to 1996, it is estimated that acquired coal mines are significantly less productive than non-acquired mines prior to having been acquired. Additionally, there is observable and significant evidence of post-acquisition productivity improvements. Finally, it is found that having been acquired positively and significantly influences the likelihood that a coal mine fails.
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profitability,
production,
productive,
gain,
merger,
acquisition,
acquirer,
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revenue,
incentive,
advantage,
profitable,
mergers acquisitions,
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Total Factor Productivity,
Census Bureau Longitudinal Business Database,
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Department of Labor,
Carnegie Mellon University
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