TY  - JOUR
AU  - Gokhale,Jagadeesh
AU  - Groshen,Erica L.
AU  - Neumark,David
TI  - Do Hostile Takeovers Reduce Extramarginal Wage Payments?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4346
PY  - 1993
Y2  - April 1993
UR  - http://www.nber.org/papers/w4346
L1  - http://www.nber.org/papers/w4346.pdf
N1  - Author contact info:
Jagadeesh Gokhale
Senior Fellow
CATO Institute
1000 Mass. Ave., NW
Washington, DC 20001
E-Mail: jgokhale@cato.org

Erica Groshen
Federal Reserve Bank of New York
Public Information
33 Liberty Street
New York, NY 210045
Tel: 212-720-7685
Fax: 212-720-6628
E-Mail: erica.groshen@ny.frb.org

David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA  92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
AB  - Hostile takeovers may reduce the prevalence of long-term employment contracts if they facilitate the opportunistic expropriation of extramarginal wage payments. Our tests of two versions of the expropriation hypothesis improve on existing research by using firm- and establishment-level data from an employer salary survey, and by performing both ex ante and ex post tests. First, we study the relationship between proxies for extramarginal wage payments and subsequent hostile takeover activity, and find little evidence of an expropriation motive. Then. since we observe wage and employment structures both before and after takeovers. we investigate whether proxies for extramarginal wages drop after hostile takeovers. The ex post experiments provide evidence consistent with one version of the expropriation hypothesis. In particular, such takeovers appear to reduce extramarginal wage payments to more-tenured workers, mostly through flattening wage-seniority profiles in firms with relatively senior work forces.
ER  -