Papers Containing Keywords(s): 'acquired'
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Sang V Nguyen - 5
Viewing papers 1 through 10 of 22
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Working PaperExploratory Report: Annual Business Survey Ownership Diversity and Its Association with Patenting and Venture Capital Success
October 2024
Working Paper Number:
CES-24-62
The Annual Business Survey (ABS) as the replacement for the Survey of Business Owners (SBO) serves as the principal data source for investigating business ownership of minorities, women, and immigrants. As a combination of SBO, the innovation questions formerly collected in the Business R&D and Innovation Survey (BRDIS), and an R&D module for microbusinesses with fewer than 10 employees, ABS opens new research opportunities investigating how ownership demographics are associated with innovation. One critical issue that ABS is uniquely able to investigate is the role that diversity among ownership teams plays in facilitating innovation or intermediate innovation outcomes in R&D-performing microbusinesses. Earlier research using ABS identified both demographic and disciplinary diversity as strong correlates to new-to-market innovation. This research investigates the extent to which the various forms of diversity also impact tangible innovation related intermediate outcomes such as the awarding of patents or securing venture capital financing for R&D. The other major difference with the earlier work is the focus on R&D-performing microbusinesses that are an essential input to radical innovation through the division of innovative labor. Evidence that disciplinary and/or demographic diversity affect the likelihood of receiving a patent or securing venture capital financing by small, high-tech start-ups may have implications for higher education, affirmative action, and immigration policy.View Full Paper PDF
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Working PaperHiring through Startup Acquisitions: Preference Mismatch and Employee Departures
September 2018
Working Paper Number:
CES-18-41
This paper investigates the effectiveness of startup acquisitions as a hiring strategy. Unlike conventional hires who choose to join a new firm on their own volition, most acquired employees do not have a voice in the decision to be acquired, much less by whom to be acquired. The lack of worker agency may result in a preference mismatch between the acquired employees and the acquiring firm, leading to elevated rates of turnover. Using comprehensive employee-employer matched data from the US Census, I document that acquired workers are significantly more likely to leave compared to regular hires. By constructing a novel peer-based proxy for worker preferences, I show that acquired employees who prefer to work for startups ' rather than established firms ' are the most likely to leave after the acquisition, lending support to the preference mismatch theory. Moreover, these departures suggest a deeper strategic cost of competitive spawning: upon leaving, acquired workers are more likely to found their own companies, many of which appear to be competitive threats that impair the acquirer's long-run performance.View Full Paper PDF
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Working PaperHow Wide Is the Firm Border?
January 2017
Working Paper Number:
CES-17-35
We quantify the normally unobservable forces that determine the boundary of the firm; that is, which transactions are mediated by ownership control as opposed to contracts or markets. To do so, we examine the shipment decisions of tens of thousands of establishments that produce and distribute a variety of products throughout the goods-producing sector. We examine how a firm's willingness to ship over distance varies with whether the recipient is owned by the firm. Because shipping costs increase with distance for many reasons, a greater volume of internal transactions at any given distance reveals the size of the firm's perceived net cost advantage of internal transactions. We find that the firm boundary is notably wide. Having one more vertically integrated downstream establishment in a location has the same effect on transaction volumes to that location as does a 40 percent reduction in distance between sender and destination. We further characterize how this 'internal advantage' varies with observable attributes of the transaction or product being shipped. Finally, we conduct a calibration of a multi-sector general equilibrium trade model and find that costs associated with transacting across firm boundaries also have discernible economy-wide implications.View Full Paper PDF
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Working PaperEvidence for the Effects of Mergers on Market Power and Efficiency
January 2016
Working Paper Number:
CES-16-43
Study of the impact of mergers and acquisitions (M&As) on productivity and market power has been complicated by the difficulty of separating these two effects. We use newly-developed techniques to separately estimate productivity and markups across a wide range of industries using confidential data from the U.S. Census Bureau. Employing a difference-in-differences framework, we find that M&As are associated with increases in average markups, but find little evidence for effects on plant-level productivity. We also examine whether M&As increase efficiency through reallocation of production to more efficient plants or through reductions in administrative operations, but again find little evidence for these channels, on average. The results are robust to a range of approaches to address the endogeneity of firms' merger decisions.View Full Paper PDF
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Working PaperResearch Funding and Regional Economies
January 2016
Working Paper Number:
CES-16-32
Public support of research typically relies on the notion that universities are engines of economic development, and that university research is a primary driver of high wage localized economic activity. Yet the evidence supporting that notion is based on aggregate descriptive data, rather than detailed links at the level of individual transactions. Here we use new micro-data from three countries - France, Spain and the United States - to examine one mechanism whereby such economic activity is generated, namely purchases from regional businesses. We show that grant funds are more likely to be expended at businesses physically closer to universities than at those farther away. In addition, if a vendor has been a supplier to a grant once, that vendor is subsequently more likely to be a vendor on the same or related grants. Firms behave in a way that is consistent with the notion that propinquity is good for business; if a firm supplies a research grant at a university in a given year it is more likely to open an establishment near that university in subsequent years than other firms.View Full Paper PDF
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Working PaperThe Human Factor in Acquisitions: Cross-Industry Labor Mobility and Corporate Diversification
September 2015
Working Paper Number:
CES-15-31
Internal labor markets facilitate cross-industry worker reallocation and collaboration, and the resulting benefits are largest when the markets include industries that utilize similar worker skills. We construct a matrix of industry pair-wise human capital transferability using information obtained from more than 11 million job changes. We show that diversifying acquisitions occur more frequently among industry pairs with higher human capital transferability. Such acquisitions result in larger labor productivity gains and are less often undone in subsequent divestitures. Moreover, acquirers retain more high skill workers and they exploit the real option to move workers from the target firm to jobs in other industries inside the merged firm. Overall, our results identify human capital as a source of value from corporate diversification and provide an explanation for seemingly unrelated acquisitions.View Full Paper PDF
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Working PaperPRODUCTIVITY, RESTRUCTURING, AND THE GAINS FROM TAKEOVERS
April 2013
Working Paper Number:
CES-13-18
This paper investigates how takeovers create value. Using plant-level data, I show that acquirers increase targets' productivity through more efficient use of capital and labor. Acquirers significantly reduce capital expenditures, wages, and employment in target plants, though output is unchanged. Acquirers improve targets'investment efficiency through better capital reallocation. Moreover, changes in productivity help explain the merging firms' announcement returns. The combined announcement returns are driven by improvements in target's productivity. Targets with greater productivity improvements receive higher premiums. These results provide some first empirical evidence on the relation between productivity and stock returns in the context of takeovers.View Full Paper PDF
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Working PaperEvolving Property Rights and Shifting Organizational Forms: Evidence From Joint-Venture Buyouts Following China's WTO Accession
March 2013
Working Paper Number:
CES-13-05
China's WTO accession offers a rare opportunity to observe multinationals' response to changes in property rights in a developing country. WTO accession reduced incentives for joint ventures while reducing constraints on wholly owned foreign subsidiaries. Concomitant with these changes was a more liberal investment environment for indigenous investors. An adaptation of Feenstra and Hanson's (2005) property rights model suggests that higher the productivity and value added of the joint venture, but the lower its domestic sales share, the more likely the venture is to be become wholly foreign owned following liberalization. Theory also suggests that an enterprise with lower productivity but higher value added and domestic sales will be more likely to switch from a joint venture to wholly domestic owned. Using newly created enterprise-level panel data on equity joint ventures and changes in registration type following China's WTO accession, we find evidence consistent with the property rights theory. More highly productive firms with higher value added and lower domestic sales shares are more likely to become wholly foreign owned, while less productive firms focused on the Chinese market are more likely to become wholly domestic owned rather than remain joint ventures. In addition to highlighting the importance of incomplete contracts and property rights in the international organization of production, these results support the view that external commitment to liberalization through WTO accession influences multinational and indigenous firms' behavior.View Full Paper PDF
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Working PaperAcquiring Labor
October 2011
Working Paper Number:
CES-11-32
We present evidence that some firms pursue M&A activity with the objective of obtaining a larger workforce. Firms most likely to be acquired for their large labor force, firms with the largest ex ante employment, are associated with more positive post-merger employment outcomes. Moreover, we find this relation is strongest when acquiring labor outside of an M&A is likely to be most difficult, due to tight labor conditions, or most valuable, in high human capital industries. We further find that high employment target firms are associated with relatively greater post-merger wage increases and lower post-merger employee turnover. We find no evidence that the positive relation between target ex ante employment and ex post employment change is driven by target asset size, market capitalization, industry, profitability or acquirer characteristics. Our findings do not exclude the possibility that a different subset of M&A activity may be motivated to penalize managers who have tolerated over-employment. Indeed, we find evidence consistent with this disciplinary motivation when considering acquisitions of targets in declining industries.View Full Paper PDF
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Working PaperPost-Merger Restructuring and the Boundaries of the Firm
April 2011
Working Paper Number:
CES-11-11
We examine how firms redraw their boundaries after acquisitions using plant-level data. We find that there is extensive restructuring in a short period following mergers and full-firm acquisitions. Acquirers of full firms sell 27% and close 19% of the plants of target firms within three years of the acquisition. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Retained plants increase in productivity whereas sold plants do not. These results suggest that acquirers restructure targets in ways that exploit their comparative advantage.View Full Paper PDF
