International College of Economics and Finance

ICEF/LFE Research Seminar by Kyeong Hun Lee (Tulane University)

On Thursday, June 2 at 4.40 pm, room 3211 (Shabolovka str. 26) ICEF and LFE held the Research Seminar in Finance.
Speaker: Kyeong Hun Lee (Tulane University)
Theme: "Human Capital Relatedness and Corporate Mergers and Acquisitions" joint with David Mauer and Emma Xu

Abstract: We construct a measure of the pairwise relatedness of firms’ human capital to examine whether mergers are motivated by a desire to harvest synergies through complementarities in human capital. Mergers are more likely between firms with more similar human capital. Consistent with synergy creation, we find that combined acquirer and target firm announcement returns and post-merger operating cash flows increase when firms have more closely related human capital. These effects are robust to controlling for product market synergies, deal characteristics, and merging firm characteristics. Evidence suggest, however, that human capital relatedness and product market relatedness are substitutes in that the likelihood of a merger and the associated announcement returns decrease when merging firms have closely related human capital and products. Our findings support the view that combining firms to capitalize on complementarities in human capital is a significant factor motivating mergers and acquisitions.

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