How general is managerial human capital?: Evidence from the Retention of Managers after M&amp;As

Industry	No. of target firms	No. of new firms	Both
Food	15	16	14
Textile	7	8	5
Pulp	13	13	10
Chemical	19	21	14
Pharmaceutical	6	3	2
Petroleum	3	6	3
Rubber	2	1	1
Ceramic	14	13	10
Iron ore	7	13	7
Nonferrous metal and metal	15	18	10
Machinery	24	24	16
Electronics	27	46	24
Shipbuilding	0	1	0
Automobile	9	9	4
Transport machinery	6	0	0
Precision instruments	2	2	1
Other manufacturers	10	9	6
Marine products	1	0	1
Mining	4	2	2
Construction	26	26	16
Trade	43	32	22
Retail	27	31	21
Other financial businesses	2	4	2
Real estate	11	1	1
Rail and bus	2	12	2
Land transportation	2	4	2
Marine transportation	7	6	6
Air transportation	1	3	1
Telecommunications	4	2	2
Electricity	0	2	0
Service	35	15	13
Total	344	344	218

Table 2

Characteristics of target directors

Variable	No. of observations	Mean	S.D.	Min.	Max.
Retained	1520	0.387	0.487	0	1
Years of survival if retained	588	4.117	2.190	1	16

Table 3

Summary statistics

Variable	No.	Mean	S.D.	Min.	Max.
Tenure as a board member at ${\hat{t}}_{j}^{⋆}$ (years)	1520	2.70	2.91	0.00	20.92
Tenure as a board member at ${\hat{t}}_{f}^{m}$ (years)	1520	8.50	7.41	0.25	56.42
Tenure as an employee (years)	1520	11.82	13.59	0.00	43.17
Outside experience (years)	1520	40.35	15.62	15.17	71.17
Age (years)	1520	60.67	5.54	35.08	90.92
Variables in $N_{h} (f, \hat{t})$ , for $\hat{t} = {\hat{t}}_{j}^{⋆}, {\hat{t}}_{f}^{m}$
Negative operating income at ${\hat{t}}_{j}^{⋆}$	1520	0.15	0.36	0.00	1.00
Negative operating income at ${\hat{t}}_{f}^{m}$	1520	0.21	0.41	0.00	1.00
Direct	1520	0.20	0.40	0.00	1.00
No. of employees at ${\hat{t}}_{j}^{⋆}$ (1000)	1520	1.70	2.65	0.006	23.87
No. of employees at ${\hat{t}}_{f}^{m}$ (1000)	1520	1.53	2.24	0.006	16.35
Wage at ${\hat{t}}_{j}^{⋆}$ (million yen)	1520	4.25	3.37	0.08	28.39
Wage at ${\hat{t}}_{f}^{m}$ (million yen)	1519	5.03	3.89	0.21	25.57
Median tenure as a titled director at ${\hat{t}}_{j}^{⋆}$ (years)	1520	4.89	4.00	0	33.17
Median tenure as a titled director at ${\hat{t}}_{f}^{m}$ (years)	1520	4.61	3.19	0.50	24.67
Median age of titled directors at ${\hat{t}}_{f}^{m}$ (years old)	1520	55.35	4.34	27.58	69.17
Variables in $N_{χ} (f, {\hat{t}}_{f}^{m})$
Sales (1000 million yen)	1520	146.78	256.95	0.68	2877.40
$τ_{f} ({\hat{t}}_{f}^{m})$ , $τ_{f} ({\hat{t}}_{j}^{⋆})$ (instrumental variables)
Median value of tenure as a board member at ${\hat{t}}_{f}^{m}$ (years)	1520	7.48	4.17	0.25	32.42
Median value of tenure as an employee (years)	1520	10.84	12.17	0.00	35.83
Median value of outside experience (years)	1520	40.20	13.66	20.42	68.42
Manager characteristics
No. of firms as a board member	1520	1.14	0.51	1.00	10.00
Board member in the acquirer before the M&A	1520	0.15	0.35	0.00	1.00
Upper	1520	0.31	0.46	0.00	1.00
Target ROA	1520	0.00	0.06	−0.43	0.52
Firm characteristics
Log target assets	1520	11.07	1.35	6.92	14.61
Board size	1520	5.77	2.73	1.00	15.00
Log stock share of top 10	1520	−6.89	1.35	−8.39	−0.14
Target firm's relative size in assets	1520	0.27	0.23	0.00	0.99
Related	1520	0.48	0.50	0.00	1.00
Acquisition	1520	0.61	0.49	0.00	1.00
Acquirer or others ROA	1520	0.00	0.06	−0.68	0.60
Log top 10 share of acquirer or others	1520	−7.09	1.56	−8.89	0.00

Table 4

GMM estimation

Variable	Coef.	Std. Err.
Negative operating income	−0.636	0.404
Direct	−1.964	1.030 ^*
No. of employees	0.000	0.000
Wage	0.242	0.049 ^***
Median tenure as a titled director	0.025	0.028
Median age	0.801	0.253 ^***
Constant $({\tilde{ϕ}}_{0})$	73.183	13.474 ^***
Tenure as an employee (ϕ_e)	0.400	0.230 ^*
Outside experience $({\tilde{ϕ}}_{o})$	0.382	0.224 ^*
1/(ζ + 1)	0.663	0.051 ^***
Sales	0.000	0.000 ^*
Industry code dummy	Yes
Decade dummy	Yes
Number of observations	1519

[i] 1. Instruments for the equation: negative operating income, direct no. of employees, wage, median tenure as a titled director, median age as a titled director, median tenure as a board member, median tenure as an employee, median outside experience, sales, and decade and industry dummy for both ${\hat{t}}_{j}^{⋆}$ and ${\hat{t}}_{f}^{m}$

[ii] 2. ^{***, **} and ^* denote statistical significance at the 1%, 5%, and 10% significance levels. Standard errors are calculated using bootstrap methods.

Table 5

Estimated unobserved skill

	Obs.	Mean	Std. Dev.	Min.	Max.
${\tilde{χ}}_{fj}$	1520	−6.606	5.104	−44.191	5.654

Table 6

Stratified Cox proportional hazards model estimation

Variable	(1)		(2)
Variable	Coef.	Std. Err.	Coef.	Std. Err.
1: Tenure as a board member	0.006	0.024	−0.010	0.009
2: Tenure as an employee	0.011	0.007 ^*	0.011	0.005 ^**
3: Tenure as a board member × initial dummy	−0.012	0.024	0.002	0.010
4: Tenure as an employee × initial dummy	−0.014	0.007 ^**	−0.014	0.005 ^***
Age	0.112	0.031 ^***	0.100	0.016 ^***
Board size	0.097	0.081	0.105	0.049 ^**
No. of firms as a board member	−0.166	0.215	−0.179	0.137
Board member in the acquirer before the M&A	−0.106	0.479	−0.108	0.308
Acquisition	−0.025	0.797	0.003	0.495
Target ROA	−11.913	7.626	−11.335	3.860 ^***
Related	0.117	0.562	0.034	0.374
Target firm's relative size in assets	−0.990	0.530^*	−0.942	0.433 ^**
Log target assets	−0.026	0.216	−0.066	0.133
Upper	−0.277	0.198	−0.264	0.132 ^**
Log stock share of top 10	−0.460	0.355	−0.455	0.194 ^**
Acquirer or others ROA	−3.164	6.143	−2.214	3.368
Log top 10 share of acquirer or others	0.134	0.265	0.092	0.162
${\tilde{χ}}_{fj}$	0.044	0.039
Age × I(t = 0)	−0.072	0.031 ^***	−0.061	0.017 ^***
Board size × I(t = 0)	−0.073	0.082	−0.080	0.051
No. of firms as a board member × I(t = 0)	−0.293	0.248	−0.281	0.184
Board member in the acquirer before the M&A × I(t = 0)	−0.114	0.482	−0.116	0.312
Acquisition × I(t = 0)	0.729	0.819	0.702	0.525
Target ROA × I(t = 0)	11.813	7.691	11.198	3.910 ^***
Related × I(t = 0)	−0.383	0.577	−0.300	0.388
Target firm's relative size in assets × I(t = 0)	−0.210	0.567	−0.257	0.464
Log target assets × I(t = 0)	0.012	0.220	0.054	0.138
Upper × I(t = 0)	−0.007	0.207	−0.017	0.143
Log stock share of top 10 × I(t = 0)	0.504	0.357	0.503	0.200 ^**
Acquirer or others ROA × I(t = 0)	5.533	6.241	4.636	3.577
Log top 10 share of acquirer or others × I(t = 0)	−0.161	0.269	−0.120	0.165
${\tilde{χ}}_{fj} \times I (t = 0)$	−0.037	0.039
Wald Test	Coef.	Chi2(1)	Coef.	Chi2(1)
1 + 3	−0.006	1.28	−0.008	5.31 ^**
2 + 4	−0.003	2.71 ^*	−0.003	3.74 ^*
Number of observations	2108		2108

[i] Stratified by year, acquirer industry code, and target industry code.

[ii] ^{***, **, *} denote statistical significance at the 1%,5%, and 10% significance levels.

[iii] Standard errors are calculated by bootstrap methods.

Table 7

Stratified Cox proportional hazards model estimation

Variable	(1)		(1)
Variable	Coef.	Std. Err.	Coef.	Err.ef.
1: Tenure as a board member	−0.002	0.022	−0.016	0.009
2: Tenure as an employee	0.010	0.006 ^*	0.010	0.005 ^*
3: Tenure as a board member × initial dummy	−0.005	0.022	0.007	0.010
4: Tenure as an employee × initial dummy	−0.013	0.006 ^**	−0.012	0.005 ^***
Age	0.116	0.026 ^***	0.107	0.016 ^***
Board size	0.036	0.020 ^*	0.039	0.046 ^**
No. of firms as a board member	−0.358	0.094 ^***	−0.361	0.082 ^***
Board member in the acquirer before the M&A	−0.229	0.074 ^***	−0.232	0.064 ^***
Acquisition	0.579	0.156 ^***	0.578	0.139 ^***
Target ROA	−0.466	1.000	−0.463	4.068
Related	−0.244	0.106 ^**	−0.252	0.097 ^***
Target firm's relative size in assets	−1.016	0.437 ^**	−1.006	0.374 ^***
Log target assets	−0.036	0.053	−0.040	0.049
Upper	−0.279	0.059 ^***	−0.275	0.133 ^***
Log stock share of top 10	−0.009	0.057	−0.008	0.195
Acquirer or others ROA	1.223	1.439	1.370	1.219
Log top 10 share of acquirer or others	−0.028	0.047	−0.035	0.043
${\tilde{χ}}_{fj}$	0.036	0.033
Age × I(t = 0)	−0.076	0.026 ^***	−0.069	0.017 ^***
Board size × I(t = 0)
No. of firms as a board member × I(t = 0)
Board member in the acquirer before the M&A
Acquisition × I(t = 0)
Target ROA × I(t = 0)
Related × I(t = 0)
Target firm's relative size in assets × I(t = 0)	−0.294	0.484	−0.289	0.414
Log target assets × I(t = 0)
Upper × I(t = 0)
Log stock share of top 10 × I(t = 0)
Acquirer or others ROA × I(t = 0)
Log top 10 share of acquirer or others × I(t = 0)
${\tilde{χ}}_{fj} \times I (t = 0)$	−0.027	0.034
Wald Test	Coef.	Chi2(1)	Coef.	Chi2(1)
1 + 3	−0.006	1.18	−0.009	5.58 ^**
2 + 4	−0.003	2.95 ^*	−0.003	4.08 ^**
Number of observations	2108		2108