Scandinavian Working Papers in Economics

Misum Working Paper Series,
Stockholm School of Economics, Mistra Center for Sustainable Markets (Misum)

No 2021-2: How Do Acquisitions Affect the Mental Health of Employees?

Ramin Baghai (), Marieke Bos, Laurent Bach and Rui Silva
Additional contact information
Ramin Baghai: Mistra Center for Sustainable Markets (Misum), Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Marieke Bos: Mistra Center for Sustainable Markets (Misum), Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Laurent Bach: ESSEC Business School Paris
Rui Silva: Nova School of Business and Economics

Abstract: Using employer-employee level data linked to individual health records, we document that the incidence of stress, anxiety, depression, psychiatric medication usage, and even suicide increase following acquisitions. These effects are prevalent among employees from both targets and acquirers, in weak as well as in growing, profitable firms. Employees who experience negative career developments within the merging firms, ’blue-collar’ workers, and employees with lower cognitive and non-cognitive skills are most affected. A variety of tests address endogeneity concerns, including an analysis exploiting failed mergers. Our findings point to mental illness as a significant non-pecuniary cost of acquisitions.

Keywords: Mergers and Acquisitions; Corporate Restructuring; Mental Health; Mental Illness

JEL-codes: G34; J81; L23

69 pages, October 26, 2021

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