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WRDS Best Paper Award was presented for this research during the Corporate Governance Academic Conference at Drexel University.

Congratulations to Alex Xi He (University of Maryland) and Jing (Sophia) Xue (Georgia State University) for their winning paper, Talent-Consolidating Mergers.

Abstract:
This paper argues that mergers that substantially increase firms’ labor market power can reduce inventors’ innovation incentives and outputs by limiting the rents inventors are able to capture. We test this mechanism using individual-level longitudinal data from the U.S. Census Bureau. At both target and acquiring firms, inventors exposed to large increases in labor market concentration in already-concentrated markets are rewarded less by patenting and produce fewer patents. They also earn lower wages and exhibit reduced job mobility following mergers. Taken together, our findings highlight how labor market power can shape inventor incentives and the innovation consequences of M&As.

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