Acquiring organizational capital

Organizational capital is the accumulation and use of private information to enhance economic efficiency for a firm. Theory has argued that organizational capital is typically embodied in employees and the organizational structure, and is hard to transfer across organizations. In this paper, we stud...

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Bibliographic Details
Main Authors: LI, Peixin, LI, Frank Weikai, WANG, Baolian, ZHANG, Zilong
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2018
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/5345
https://ink.library.smu.edu.sg/context/lkcsb_research/article/6344/viewcontent/Acquiring_organizational_capital_Accepted.pdf
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Institution: Singapore Management University
Language: English
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Summary:Organizational capital is the accumulation and use of private information to enhance economic efficiency for a firm. Theory has argued that organizational capital is typically embodied in employees and the organizational structure, and is hard to transfer across organizations. In this paper, we study whether organizational capital is transferable across firms via mergers. The evidence shows that acquirers gain more from acquiring firms with higher organizational capital and acquirers are also willing to pay a higher premium for higher organizational capital targets. The evidence suggests that acquiring higher organizational capital targets creates synergies which are shared between acquirers and targets.