• I would like to thank Randall Heron (the associate editor) and an anonymous referee for their valuable comments and suggestions. I would also like to thank Katsiaryna Salavei Bardos, Olubunmi Faleye, Shantaram Hegde, Karthik Krishnan, session participants at the 2011 Financial Management Association annual meetings, and at the 2012 Eastern Finance Association meetings for many helpful comments.


In this article I investigate the relation between the employee-friendly practices of the acquiring firm and the acquisition performance. I find a positive relation between employee friendliness of the acquirer and acquisition performance. Employee friendliness of the acquirer is also positively linked to acquisition completion probabilities and completion speeds. The effect of employee-friendly policies on performance is stronger for human-capital-intensive firms. The positive relation between employee friendliness and acquisition performance is robust to an alternative measure of employee friendliness and endogeneity corrections. The results reflect the importance of human capital and employee-related policies for the long-term success of an acquisition.