Abstract
Dozens of studies have repeatedly shown that corporate mergers rarely create economic value, no matter whether this is measured in terms of shareholder value or productive efficiency. Whether this finding also applies to other sectors of the economy has, however, hardly been studied in any great detail. The current study
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aims to help fill this gap. It explores the issue by mapping and studying mergers in the Dutch social housing sector. More in particular, the study asks whether mergers between social housing firms (denoted as ‘woningcorporaties’ in Dutch) lead to an increase in the productive efficiency of their business processes. The analysis covers the period 2000-2010, thus including a period in which mergers among such housing firms were especially popular. The study shows, however, that this popularity cannot easily be linked to gains in productive efficiency. First, there appears no significant positive correlation between the size of housing firms (as measured by the number of housing units) and their productive efficiency. Consequently, the study suggests that social housing is rather insensitive to scale economies. In turn, this suggests that mergers are unlikely to have a positive effect on productive efficiency either. This is studied in more detail by comparing the productive efficiency of merged social housing firms with a control group of entities that did not take part in a merger. Regression findings corroborate what the correlation findings already suggest: taken as a whole, merging in the social housing sector does not create productive efficiency advantages for the merged firms. Further exploratory exercises suggest that merged social housing firms cannot outcompete control groups in various other respects. This leaves open an interesting question: if there are no productive efficiency gains to be realised, why do social housing firms undertake mergers at all? This study has not been set up to find an answer to this question but rather as an exploratory study, i.e. as a study to accumulate evidence with respect to incidence and performance and to discuss potential inconsistencies. Still, it seems more than a coincidence that performance results—or rather the lack thereof—are so similar between sectors that are so different in other respects. It is also remarkable that the sudden increase in social housing mergers during the very first years of the century follows so closely a similar increase in the corporate sector in the late 1990s. Although man-agerial motives (empire building, executive pay) cannot be ruled out, the intertemporal sequentiality of merger booms in the two sectors seems to suggest that the enormous popularity of mergers in the corporate sector has had some contagious effect on the social housing sector.
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