How Do Mergers Affect the Mental Health of Employees?

We study employee mental health to assess the long-term nonmonetary consequences of mergers. Using employer-employee level data linked to individual health records, we document that the incidences of stress, anxiety, depression, and psychiatric medication usage increase following mergers. These effects are prevalent among employees from both targets and acquirers, in weak and in growing profitable firms. Employees who experience negative career developments within the merging firms, ‘blue-collar’ workers, and employees with lower skills are most affected. Mergers that generate more mental illness among employees perform worse after the transaction. A variety of tests address endogeneity concerns. This paper was accepted by Camelia Kuhnen, finance. Funding: Funding from the Mistra Center for Sustainable Markets (Misum) and the Nasdaq Nordic Foundation is gratefully acknowledged. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.04277 .