When Vultures Bring Blessings: Employment Growth in Japanese businesses under Private Equity Ownership

Blind, Georg and Lottanti von Mandach, Stefania (2017): When Vultures Bring Blessings: Employment Growth in Japanese businesses under Private Equity Ownership.

Abstract

Tracking the effect of private equity ownership on employment in Japan, we find evidence that employment grows significantly under private equity ownership, a finding that runs against common expectations and stands in stark contrast with results from studies on Anglo-Saxon economies. We further find that the increase is not attributable to selection effects and that growth rates during the holding period are significantly higher than under the previous ownership. Triangulating these findings through interviews with labor, management, and fund ownership, we find implicit labor protection through reputational concerns the underlying taming mechanism for the observed deviation from expected patterns of employment reduction.

• Item Type: MPRA Paper
• Language: English
• Keywords: employment adjustments; private equity; buyout investments; Japan
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics > M51 - Firm Employment Decisions ; Promotions

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