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On Productivity and Plant Ownership Change: New Evidence From the LRD

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  • Sang V Nguyen
  • Robert H Mcguckin

Abstract

This paper investigates the questions of what type of establishment experiences ownership change, and how the transferred properties perform after acquisition. Are they the profitable operations suggested by Ravenscraft and Scherer (1986), or the poorly operating ones found by Lichtenberg and Siegel (1992)? Is the primary motive of ownership change the rehabilitation of low productivity plants as suggested by Lichtenberg and Siegel? Our empirical work is based on an unbalanced panel of 28,294 plants taken from the U.S. Bureau of the Census' Longitudinal Research Database ( LRD ). The data set provides complete coverage of the food manufacturing industry (SIC 20) for the period 1977-1987. Our principle findings are that (1) ownership change is generally associated with the transfer of plants with above average productivity, however, large plants, empirically, those with more than 200 employees, are more likely to be purchased than closed when they are performing poorly; and (2) transferred plants experience improvement in productivity performance following the ownership change.

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File URL: ftp://ftp2.census.gov/ces/wp/1993/CES-WP-93-15.pdf
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 93-15.

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Date of creation: Nov 1993
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Handle: RePEc:cen:wpaper:93-15

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

References

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  1. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers 88-2, Center for Economic Studies, U.S. Census Bureau.
  2. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  3. Mueller, Dennis C, 1969. "A Theory of Conglomerate Mergers," The Quarterly Journal of Economics, MIT Press, vol. 83(4), pages 643-59, November.
  4. Thomas A Abbott Iii, 1989. "Price Dispersion in U.S. Manufacturing," Working Papers 89-7, Center for Economic Studies, U.S. Census Bureau.
  5. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November.
  6. Holmes, T.J. & Schmitz, J.A., 1988. "A Theory Of Enterpreneurship And Its Application To The Study Of Business Transfers," Working papers 8827, Wisconsin Madison - Social Systems.
  7. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
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Citations

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Cited by:
  1. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, Elsevier.
  2. Mahmut Yasar & Roderick M. Rejesus & Ilhami Mintemur, 2006. "Plant-level dynamics and aggregate productivity growth in the Turkish meat-processing industry: Evidence from longitudinal data," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 91-107.
  3. Sang V. Nguyen & Michael Ollinger, 2009. "Mergers and acquisitions, employment, wages, and plant closures in the U.S. meat product industries," Agribusiness, John Wiley & Sons, Ltd., vol. 25(1), pages 70-89.
  4. John Knight & Sai Ding and Alessandra Guariglia, 2010. "Negative investment in China: financing constraints and restructuring versus growth," Economics Series Working Papers 519, University of Oxford, Department of Economics.
  5. HOSONO Kaoru & TAKIZAWA Miho & TSURU Kotaro, 2009. "Mergers, Innovation, and Productivity: Evidence from Japanese manufacturing firms," Discussion papers 09017, Research Institute of Economy, Trade and Industry (RIETI).
  6. Celikkol, Pinar & Dunn, James W. & Stefanou, Spiro E., 2003. "Policy Reform Impact on Food Manufacturing," Policy Reform and Adjustment Workshop, October 23-25, 2003, Imperial College London, Wye Campus 15743, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
  7. Peter L. Rousseau, 2006. "The Q-Theory of Mergers: International and Cross-Border Evidence," 2006 Meeting Papers 153, Society for Economic Dynamics.
  8. Sang V Nguyen & Robert H Mcguckin & Arnold P Reznek, 1995. "The Impact Of Ownership Change On Employment, Wages, And Labor Productivity In U.S. Manufacturing 1977-87," Working Papers 95-8, Center for Economic Studies, U.S. Census Bureau.
  9. Ollinger, Michael & Nguyen, Sang V., 2003. "Empirical Evidence On The Motives For Mergers And Acquisitions In Eight Food Industries," 2003 Annual meeting, July 27-30, Montreal, Canada 22176, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Catherine Armington & Alicia Robb, 1998. "Mergers and Acquisitions in the United States: 1990-1994," Working Papers 98-15, Center for Economic Studies, U.S. Census Bureau.
  11. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2006. "Food Industry Mergers and Acquisitions Lead to Higher Labor Productivity," Economic Research Report 7246, United States Department of Agriculture, Economic Research Service.
  12. Robert H McGuckin & Sang V Nguyen, 2000. "The Impact of Ownership Changes: A View from Labor Markets," Working Papers 00-02, Center for Economic Studies, U.S. Census Bureau.
  13. Karpaty, Patrik, 2004. "Are foreign owned firms more productive? Evidence from Swedish firm data," Working Papers 2004:6, Örebro University, School of Business.

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