Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry
Serguey Braguinsky, Atsushi Ohyama, Tetsuji Okazaki, Chad Syverson
American Economic Review · 2015 · Volume 105 · Issue 7
Abstract
We explore how changes in ownership affect the productivity and profitability of producers. Using detailed data from the Japanese cotton spinning industry at the turn of the last century, we find that acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition. They were much less profitable, however, due to higher inventory levels and lower capacity utilization—differences that reflected problems in managing the uncertainties of demand. After acquisitions, less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels. (JEL D24, G32, G34, L11, L25, L66, N65)
Keywords
Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill, Mergers, Acquisitions, Restructuring, Voting, Proxy Contests, Corporate Governance, Pricing, and Market Structure, Size Distribution of Firms, Firm Performance: Size, Diversification, and Scope, Food, Beverages, Cosmetics, Tobacco, Wine and Spirits, Economic History: Manufacturing and Construction: Asia including Middle East
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