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Understanding the productivity effect of M&A in Japan: An empirical analysis of the electronics industry from 1989 to 1998

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  • Takechi, Kazutaka

Abstract

This study examines the effect of mergers and acquisitions (M&A) on productivity. According to the literature, the effect of a merger or acquisition on an acquiring firm's productivity is small. We examine the extent to which self-selection of M&A contributes to the weak M&A effect. Using data on Japanese electronics firms from 1989 to 1998, our empirical analysis shows that without controlling for the self-selection of M&A, M&A have a weak or insignificant effect on total factor productivity (TFP), as suggested in the literature. However, controlling for self-selection reveals a positive and large effect on productivity. We find a negative correlation between M&A decisions and TFP caused by self-selection, which makes the M&A effect appear negligible when it is not controlled for. These results suggest that M&A served as an effective device for improving the productivity of the electronics firms in our sample.

Suggested Citation

  • Takechi, Kazutaka, 2013. "Understanding the productivity effect of M&A in Japan: An empirical analysis of the electronics industry from 1989 to 1998," Japan and the World Economy, Elsevier, vol. 25, pages 1-9.
    • Handle: RePEc:eee:japwor:v:25-26:y:2013:i::p:1-9
    DOI: 10.1016/j.japwor.2013.01.001
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    References listed on IDEAS

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    2. Fukuda, Akira, 2020. "The Effects of M&A on Corporate Performance in Japan:DID Analysis in the Era of Corporate Governance Reform," Japan and the World Economy, Elsevier, vol. 55(C).

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    More about this item

    Keywords

    D24; F23; G34; Productivity; Domestic M&A; Cross-border M&A; Self-selection;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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