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Do Foreign Mergers & Acquisitions Boost Firm Productivity?

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  • Schiffbauer, Marc

    (ESRI)

  • Siedschlag, Iulia

    (ESRI)

  • Ruane, Frances

    (ESRI)

Abstract

This paper examines the causal relationship between foreign mergers and acquisitions and firm productivity in the UK over the period 1999-2007. Our results raise questions about the existence of aggregate effects of foreign ownership on TFP in the longer-run. However, we find significant heterogeneity in the TFP effects of foreign M&A at the industry level. Overall, we uncover a systematic pattern of post-acquisition TFP effects that is consistent with the most recent theoretical models of firm heterogeneity and cross-border mergers and acquisitions as mode of foreign entry. Furthermore, we find positive aggregate effects on labor productivity due to capital deepening but not due to changes in TFP.

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File URL: http://www.esri.ie/research/research_areas/international_economics/dynreg/papers/WP47.pdf
File Function: 2009
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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG47.

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Length: 40 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:esr:wpaper:dynreg47

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Keywords: Cross-border mergers and acquisitions; Productivity; Firm heterogeneity;

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  8. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
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  17. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
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  22. Richard Harris & Catherine Robinson, 2003. "Foreign Ownership and Productivity in the United Kingdom Estimates for U.K. Manufacturing Using the ARD," Review of Industrial Organization, Springer, vol. 22(3), pages 207-223, May.
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