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Do Foreign Mergers & Acquisitions Boost Firm Productivity?

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Author Info
Schiffbauer, Marc (ESRI)
Siedschlag, Iulia (ESRI)
Ruane, Frances (ESRI)

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

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References listed on IDEAS
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    Other versions:
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    Other versions:
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  17. 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. [Downloadable!]
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  18. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 02 May 2009. [Downloadable!]
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    Other versions:
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