DP16657 How Do Acquisitions Affect the Mental Health of Employees?

Author(s): Laurent Bach, Ramin P. Baghai, Marieke Bos, Rui C Silva
Publication Date: October 2021
Keyword(s): Corporate Restructuring, mental health, Mental Illness, mergers and acquisitions
JEL(s): G34, I10, J81, L23
Programme Areas: Labour Economics, Financial Economics, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16657

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.