Papers Containing Keywords(s): 'acquirer'
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Sang V Nguyen - 5
Viewing papers 11 through 20 of 25
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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
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Working PaperDelegation in Multi-Establishment Firms: The Organizational Structure of I.T. Purchasing Authority
October 2010
Working Paper Number:
CES-10-35
A rare large-scale empirical study of delegation within firms, this paper investigates how decision rights over information technology investments are allocated within multi-establishment firms. The core results indicate that a relatively high contribution to firm sales is highly correlated with authority being delegated to the local establishment. Firm-wide operational complexity and local information advantages are also associated with local discretion for IT purchases. Certain IT investments are also positively correlated with delegation. On the other hand, significant operational interdependencies evince a positive correlation with centralization, as do productive similarities among establishments. Surprisingly, absolute size of the firm and having a large IT budget are also correlated with centralized IT decision-making. With the exception of these latter effects, the results are consistent with models of organizational design that predict delegation where there is great demand for locally adapted choices and centralization where firm-wide coordination is most important. The findings document and make sense of widespread heterogeneity in decision rights across a range of firm and industry settings ' even among establishments belonging to the same parent firm. Finally, they suggest important considerations for future empirical and theoretical research into the determinants of delegation.View Full Paper PDF
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Working PaperBuilding New Plants or Entering by Acquisition? Estimation of an Entry Model for the U.S. Cement Industry
April 2010
Working Paper Number:
CES-10-08
In many industries, firms usually have two choices when expanding into new markets: They can either build a new plant (greenfield entry) or they can acquire an existing incumbent. The U.S. cement industry is a clear example. For this industry, I study the effect of two policies on the entry behavior and industry equilibrium: An asymmetric environmental policy that creates barriers to greenfield entry and a policy that creates barriers to entry by acquisition (like an antitrust policy). In the U.S. cement industry, the comparative advantage (e.g., TFP or size) of entrants versus incumbents and the regulatory entry barriers are important factors that determine the means of expansion. To model this industry, I use a perfect information static entry game. To estimate the supply and demand primitives of my model, I apply a recent estimator of discrete games to a rich database of the U.S. Census of Manufactures for the years 1963-2002. In my counterfactual analyses, I find that a less favorable environment for mergers during the Reagan-Bush administration would decrease the acquired plants by 70% and increase the new plants by 20%. Also, I find that the Clean Air Act Amendments of 1990 increased the number of acquisitions by 7.8%. Furthermore, my simulations suggest that regulations that create barriers to greenfield entry are less favorable in terms of welfare than regulations that create barriers to entry by acquisition. Finally, I demonstrate how my parameter estimates change when I apply the traditional approach in the entry literature where entry by acquisition is not considered, and when using a simple OLS estimation.View Full Paper PDF
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Working PaperInformation Technology, Capabilities and Asset Ownership: Evidence from Taxicab Fleets
November 2009
Working Paper Number:
CES-09-39
We examine how information technology (IT) influences asset ownership through its impact on firms' and agents' capabilities. In particular, we propose that when IT is a substitute for agents' industry-specific human capital, IT adoption leads to increased vertical integration. We test this prediction using micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. The empirical tests exploit exogenous variation in local market conditions, to identify the impact of dispatching technology on firm asset ownership. The results show that firms increase the proportion of taxicabs owned by 12% when they adopt new computerized dispatching systems. The findings suggest that firms increasingly vertically integrate when they acquire resources that substitute for their agents' capabilities.View Full Paper PDF
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Working PaperOn the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms
May 2008
Working Paper Number:
CES-08-13
We use a new data set that tracks U.S. firms from their birth over two decades to understand the life cycle dynamics and outcomes (both successes and failures) of VC- and non-VC financed firms. We first ask to what market-wide and firm-level characteristics venture capitalists respond in choosing to make their investments and how this differs for firms financed solely by non-VC sources of entrepreneurial capital. We then ask what are the eventual differences in outcomes for firms that receive VC financing relative to non-VC-financed firms. Our findings suggest that VCs follow public market signals similar to other investors and typically invest largely in young firms, with potential for large scale being an important criterion. The main way that VC financed firms differ from matched non-VC financed firms, is they demonstrate remarkably larger scale both for successful and failed firms, at every point of the firms' life cycle. They grow more rapidly, but we see little difference in profitability measures at times of exit. We further examine a number of hypotheses relating to VC-financed firms' failure. We find that VC-financed firms' cumulative failure rates are lower than non-VC-financed firms but the story is nuanced. VC appears initially 'patient' in that VC-financed firms are less likely to fail in the first five years but conditional on surviving past this point become more likely to fail relative to non-VC-financed firms. We perform a number of robustness checks and find that VC does not appear to have more stringent survival thresholds nor do VC-financed firm failures appear to be disguised as acquisitions nor do particular kinds of VC firms seem to be driving our results. Overall, our analysis supports the view that VC is 'patient' capital relative to other non-VC sources of entrepreneurial capital in the early part of firms' lifecycles and that an important criterion for receiving VC investment is potential for large scale, rather than level of profitability, prior to exit.View Full Paper PDF
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Working PaperPrivate Equity and Employment
March 2008
Working Paper Number:
CES-08-07R
Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth. Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors. But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years. In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms.View Full Paper PDF
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Working PaperThe Industry Life Cycle and Acquisitions and Investment: Does Firm Organization Matter?
October 2005
Working Paper Number:
CES-05-29
We examine the effect of financial dependence on the acquisition and investment of single segment and conglomerate firms for different long-run changes in industry conditions. Conglomerates and single-segment firms differ in the investments they make. The main differences are in the investment in acquisitions rather than in the level of capital expenditure. Financial dependence, a deficit in a segment's internal financing, decreases the likelihood of acquisitions and opening new plants, especially for single-segment firms. These effects are mitigated for conglomerates in growth industries and also for firms that are publicly traded. In declining industries, plants of segments that are financially dependent are less likely to be closed by conglomerate firms. These findings persist after controlling for firm size and segment productivity. We also find that plants acquired by conglomerate firms in growth industries increase in productivity post-acquisition. The results are consistent with the comparative advantages of different firm organizations differing across long-run industry conditions.View Full Paper PDF
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Working PaperMergers and Acquisitions and Productivity in the U.S. Meat Products Industries: Evidence from the Micro Data
March 2002
Working Paper Number:
CES-02-07
This paper investigates the motives for mergers and acquisitions in the U.S. meat products industry from1977-92. Results show that acquired meat and poultry plants were highly productive before mergers, and that meat plants significantly improved productivity growth in the post-merger periods, but poultry plants did not.View Full Paper PDF
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Working PaperDiversification Discount or Premium? New Evidence from BITS Establishment-Level Data
December 2001
Working Paper Number:
CES-01-13
This paper examines whether the finding of a diversification discount in U.S. stock markets is only a data artifact. Segment data may give rise to biased estimates of the value effect of diversification because segments are defined inconsistently across firms, and that inconsistency does not occur at random. I use a new establishment-level database that covers the whole U.S. economy (BITS) to construct business units that are more consistently and objectively defined across firms, and thus more comparable. Using a common methodological approach on a sample of firms which exhibit a diversification discount according to segment data, I find that, when BITS data are used, diversified firms actually trade at a significant average premium. The premium is robust to variations in the method, sample, business unit definition, and measures of excess value and diversification used.View Full Paper PDF
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Working PaperThe Impact of Ownership Changes: A View from Labor Markets
March 2000
Working Paper Number:
CES-00-02
Previous studies of mergers and acquisition often focus on firms' performance such as profits, productivity and market shares. However, from a broad competition policy perspective, the impacts on labor and wages are crucial. In this study, we use plant-level data for the entire U.S. manufacturing for the period 1977-87 to examine the effects of ownership changes on employment, wages and plant closing. Our principal findings are that ownership changes are not a primary vehicle for cuts in employment and wages, or closing plants. Instead, the typical ownership change appear to increase jobs and their quality as measured by wages. However, some ownership changes, particularly those in bigger plants, are associated with job loss, and the typical worker fares much worse than the typical plant. Finally, we find that plants that changed owners have a higher probability of survival than those that did not. Overall, the impact of ownership changes on labor markets are positive.View Full Paper PDF
