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<p>This paper examines the relationship between takeover vulnerability and organization capital, a factor of production embodied in key employees and in the agglomeration of the firm’s business processes and technology. We find that firms with more organization capital are more vulnerable to takeover. Our results are supported by several tests for simultaneity, omitted variable issues, and measurement error. The impact of organization capital on takeover probability is more pronounced when it operates in a more competitive product market or when the volatility of target’s employees is lower. Using the quasi-natural experiment of Seru (J Financ Econ 111:381-405, <CitationRef CitationID="CR71">2014</CitationRef>), we find that acquirer organization capital improves after takeover, especially when the target firms have more organization capital. Acquiring firms experience higher announcement returns if the target accumulates more organization capital.</p>

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Organization capital and takeover vulnerability

  • 期刊论文

  • 发表日期：

    2025年4月28日

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  • Konan Chan,
  • Yanzhi Wang,
  • Hsiao-Lin Yang

摘要

This paper examines the relationship between takeover vulnerability and organization capital, a factor of production embodied in key employees and in the agglomeration of the firm’s business processes and technology. We find that firms with more organization capital are more vulnerable to takeover. Our results are supported by several tests for simultaneity, omitted variable issues, and measurement error. The impact of organization capital on takeover probability is more pronounced when it operates in a more competitive product market or when the volatility of target’s employees is lower. Using the quasi-natural experiment of Seru (J Financ Econ 111:381-405, 2014), we find that acquirer organization capital improves after takeover, especially when the target firms have more organization capital. Acquiring firms experience higher announcement returns if the target accumulates more organization capital.