This paper examines the effect of mergers and acquisitions on employment growth in newly acquired firm establishments. Based on a unique full sample of manufacturing and services firms in Switzerland, our main finding is that the relative size of a deal is an important growth determinant: While the initial size of the acquiring firm is positively related to an acquired establishment’s growth, the opposite holds true for the initial size of the acquisition. We also contribute to a controversial debate on firm growth in general by rejecting Gibrat’s law of proportionate growth for firm establishments in Switzerland. In fact, employment growth decreases with an establishment’s initial size and age—at the aggregate level as well as within separate subsamples of manufacturing and services firms.
Small Business Economics – Springer Journals
Published: Feb 13, 2015
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