Does speculative news hurt productivity? Evidence from takeover rumors

  • Speculative news on corporate takeovers may hurt productivity because uncertainty and threat of job loss cause anxiety, distraction, and reduced collaboration and morale among employees and managers. Using a panel of OECD-headquartered firms, we show that firm productivity temporarily declines upon announcements of speculative takeover rumors that do not materialize. This productivity dip is more pronounced for targets and for firms in countries with weaker employee rights and less long-term orientation. Abnormal stock returns mirror these results. The evidence fosters our understanding of potential real effects of speculative financial news and the costs of takeover threats.

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Author:Christian AndresORCiDGND, Dmitry BazhutovGND, Douglas J. CummingORCiDGND, Peter LimbachORCiDGND
Series (Serial Number):CFS working paper series (No. 701)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Year of Completion:2023
Year of first Publication:2023
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2023/03/16
Tag:Distraction; Employee commitment; Employee rights; Fear of job loss; Productivity; Shareholder wealth; Takeover speculation
Edition:January 2023
Page Number:64
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:D Microeconomics / D2 Production and Organizations / D24 Production; Cost; Capital and Total Factor Productivity; Capacity
G Financial Economics / G0 General / G00 General
G Financial Economics / G3 Corporate Finance and Governance / G34 Mergers; Acquisitions; Restructuring; Corporate Governance
J Labor and Demographic Economics / J2 Demand and Supply of Labor / J24 Human Capital; Skills; Occupational Choice; Labor Productivity
Licence (German):License LogoDeutsches Urheberrecht