Collective Bargaining and Mergers and Acquisitions Activity around the World

Our results highlight the importance of collective bargaining on the pattern of takeover activity in 46 countries from the early 1990s. We find that the frequency and volume of takeovers within industries increase in countries with powerful labor unions and high coverage of bargaining coordination. Economically, collective bargaining largely offsets the negative effect of tighter employment protection legislations on takeovers documented in prior works. Further analyses show that collective bargaining encourages takeover activity by allowing acquirers to extract higher rents held by employees but also by facilitating the pre-completion phase of deals. Our results provide new insights into the real effects of collective bargaining in the context of takeovers around the world.