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American Economic Review Vol. 105 No. 7 2015

Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry

Serguey Braguinsky1; Atsushi Ohyama2; Tetsuji Okazaki3; Chad Syverson4

1 Department of Social and Decision Sciences, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213, and NBER (e-mail: ) · 2 Graduate School of Economics and Business Administration, Hokkaido University, Kita 9, Nishi 7, Kitaku, Sapporo 060-0809, Japan (e-mail: ) · 3 Faculty of Economics, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan (e-mail: ) · 4 Booth School of Business, University of Chicago, 5807 S. Woodlawn Avenue, Chicago, IL 60637, and NBER (e-mail: )

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Abstract

We explore how changes in ownership affect the productivity and profitability of producers. Using detailed data from the Japanese cotton spinning industry at the turn of the last century, we find that acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition. They were much less profitable, however, due to higher inventory levels and lower capacity utilization—differences that reflected problems in managing the uncertainties of demand. After acquisitions, less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels.

DOI
10.1257/aer.20140150
Volume
105
Issue
7
Pages
2086-2119
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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