Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry / Serguey Braguinsky, Atsushi Ohyama, Tetsuji Okazaki, Chad Syverson.

Format:

Book

Author/Creator:

Braguinsky, Serguey.

Contributor:

National Bureau of Economic Research.

Ohyama, Atsushi.

Okazaki, Tetsuji.

Syverson, Chad.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19901.

NBER working paper series no. w19901

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Acquisitions, Productivity, and Profitability

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization--differences which reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.

Notes:

Print version record

February 2014.