American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry
American Economic Review
vol. 105,
no. 7, July 2015
(pp. 2086–2119)
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)Citation
Braguinsky, Serguey, Atsushi Ohyama, Tetsuji Okazaki, and Chad Syverson. 2015. "Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry." American Economic Review, 105 (7): 2086–2119. DOI: 10.1257/aer.20140150Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 Firm Performance: Size, Diversification, and Scope
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- N65 Economic History: Manufacturing and Construction: Asia including Middle East