The objective of this article is to identify the mechanism of employees' career anxiety when they face the contingency of merger and acquisition of companies they belong to. In this article, it is hypothesized that employees' anxiety is attributed to the change of implied contract of tenure and level of salary that may be influenced by the contingency. Studying publicly released longitudinal data from personnel directories of city banks involved in mergers and acquisitions in the 1990's, resulted in the following two observations.
First, analysis of tenure showed that the total number of employees decreased significantly after such events. In the sample of Sakura Bank, length of tenure is significantly shorter after the contingency happened. Also, the significance level is higher for younger employees. For employees of low rank, and for those assigned to be loaned to another company just after the contingency, the decrease in tenure is more pronounced.
Second, analysis of levels showed average monthly salary increased significantly after the event. However, the probability of promotion to higher ranks decreased significantly.
The empirical study in this article generally supports the hypothesis that employees' anxiety may be attributed to the change of implied contract of tenure and level of salary, factors that may be influenced by the contingency. However, it was also observed that for personnel who still have the potential of promotion to higher level managers, the contingency does not necessarily have an unfavorable effect. This observation implies there is no “implied breach of contract” as claimed by Shleifer et al. (1988).
