Organizational capital is the accumulation and use of private information to enhance economic efficiency for a firm. Theory has argued that organizational capital is typically embodied in employees and the organizational structure, and is hard to transfer across organizations. In this paper, we study whether organizational capitalis transferable across firms via mergers. The evidence shows that acquirers gain more from acquiring firms with higher organizational capital and acquirers are also willing to pay a higher premium for higher organizational capital targets. The evidence suggests that acquiring higher organizational capital targets creates synergies which are shared between acquirers and targets.
Abnormal returns, Mergers and acquisitions, Organizational capital, Synergy
Finance and Financial Management | Organizational Behavior and Theory
Finance Research Letters
LI, Peixin; LI, Frank Weikai; WANG, Baolian; and ZHANG, Zilong.
Acquiring organizational capital. (2017). Finance Research Letters. 1-13. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/5345
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