Impact of mergers and acquisitions on employment in Africa
Date
2018-04
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Abstract
In Africa, several empirical studies on mergers and acquisitions (M&A) have mainly
focused on why they occur and not on their likely impact on macroeconomic indicators.
Mergers and Acquisitions are major corporate actions but these raise imperative concerns
about labour employment. The objective of this study therefore is to empirically test the
impact of M&A on employment in Africa using annual time series and cross-sectional
data of 14 African countries from 1990 to 2010. The study developed an empirical model
in which M&A, interest rate, GDP growth and inflation are the explanatory variables,
with employment as the dependent variable. Before the model is estimated, the time
series features of the data are diagnosed. A panel dataset is created and the model is re
estimated using the Feasible Generalized Least Squares (FGLS) estimator which corrects
for heteroskedasticity and autocorrelation. The estimated results suggest that M&A have
a statistically significant and negative relationship with employment in Africa. The
implication of the study’s findings necessitates the need for employers to pay attention to
the loss of institutional knowledge in using M&A as a tool for downsizing employment
and the need for employees to learn new skills to increase their retention rates during an
M&A deal. One major implication for policy makers in Africa such as trade unions and
labour institutions is the need to negotiate for mutually beneficial post-merger integrating
strategies geared towards the protection of workers interest.
Description
Thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2018
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Keywords
Africa, mergers and acquisitions, employment