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Hiring High-Skilled Labor Through Mergers and Acquisitions

Published online by Cambridge University Press:  19 July 2023

Jun Chen ,
Shenje Hshieh  and
Feng Zhang
Jun Chen
Affiliation:
Renmin University of China School of Business chen.jun@rmbs.ruc.edu.cn
Shenje Hshieh
Affiliation:
City University of Hong Kong College of Business shshieh@cityu.edu.hk
Feng Zhang*
Affiliation:
Southern Methodist University Cox School of Business
*
fengzhang@smu.edu (corresponding author)
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Abstract

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Using random H-1B visa lotteries as a natural experiment, we find that firms respond to shortages of high-skilled workers by acquiring firms that employ such workers. The effect is stronger among firms with high human capital and more senior workforces, firms facing tight labor markets and legal barriers to poaching workers, and firms lacking foreign affiliates. The acquired workers are highly educated, sharing skills and occupations similar to those of the acquirer’s existing workers. Our findings suggest skilled labor is an important driver of acquisitions and acquiring is an effective means of obtaining skilled labor.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 37
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

For their valuable comments and suggestions, the authors thank an anonymous referee, Yongqiang Chu, Vicente Cuñat (discussant), Ran Duchin (the editor), Michael Ewens, Huasheng Gao, Janet Gao, Xavier Giroud, Jack He, Song Ma, Yujing Ma (discussant), Diogo Mendes (discussant), Paige Ouimet, Yihui Pan, Jan Schneemeier (discussant), Elena Simintzi, Tracy Yue Wang, Wenyu Wang, Joshua White (discussant), Yufeng Wu, Han Xia, Fei Xie, Ting Xu, Liu Yang, Rebecca Zarutskie (discussant), and seminar attendants at the 2021 AFA conference, the 2021 Fifth Annual Mergers & Acquisitions Research Centre Conference, the 2021 FIRS finance conference, the 2021 Labor and Finance Online Seminar, the Corporate Finance Workshop, the 2021 MFA conference, the 2022 Paris December Finance Meeting, the 2022 Finance Cavalcade Asia-Pacific, and Renmin University. Akul Malhotra and Muhammad Salik provided excellent research assistance. We thank Bright Data for allowing us to use their LinkedIn data. This research was financially supported by an Early Career Scheme research grant (ECS Grant No. 21502720) from the Research Grant Council, Hong Kong SAR.

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