“The Joint Effect of Unionization and Economy-wide Shocks on Industry M&A Activity”
by Şerif Aziz Şimşir
We examine the effect of labor unionization on industry-level takeover activity after negative economy-wide shocks. Focusing on the 2008 financial crisis, we find that the merger intensities drop significantly during the post-crisis period. However, the degree of unionization in an industry attenuates the negative effect of the financial crisis on merger activity. Prior literature shows that unionization tends to lower takeover activity. Our results indicate that, in times of economy-wide crises, this adverse effect is weakened since we also document a similar pattern after the 2001 recession. In contrast to economy-wide crises, industry-level economic shocks do not lead to a relative increase in M&A activity for unionized industries.