Employment Growth and Capital Profitability in Mergers and Acquisitions: An Empirical Study

This study examines the influence of employment growth on capital profitability in the context of 154 mergers and acquisitions (M&As) conducted globally between 1990 and 1997. Drawing from neoclassical growth theory and applying an Ordinary Least Squares (OLS) regression model, the research finds that capital profitability prior to acquisition and post-acquisition employment growth contribute positively to post-acquisition capital returns. Conversely, growth in sectoral employment before acquisition appears to negatively influence profitability. By incorporating dummy variables for majority ownership and vertical integration, the analysis reveals nuanced patterns with limited statistical significance. These findings highlight the multifaceted nature of value creation in M&A scenarios and underscore the importance of human capital considerations during corporate restructuring.