Advanced Search
MyIDEAS: Login

Do Out-In M&As Bring Higher TFP to Japan? An Empirical Analysis Based on Micro-data on Japanese Manufacturing Firms

Contents:

Author Info

  • Kyoji Fukao
  • Keiko Ito
  • Hyeog Ug Kwon

Abstract

This paper compares the performance of foreign-owned and domestically-owned firms, using micro data on Japanese firms in the manufacturing sector for the period 1994-2000. The overall comparison between foreign-owned and Japanese companies shows that foreign-owned companies enjoyed 5% higher TFP as well as higher earnings and returns on capital. They also displayed a higher capital-labor ratio and higher R&D intensity. Reflecting their higher TFP and labor-saving production patterns, foreign-owned companies showed higher labor productivity and wage rates as well. By estimating Probit models, we found that foreign firms acquire Japanese firms with higher TFP levels and higher profit rates. In contrast, in-in M&As seem to have the characteristics of rescue missions. Small firms with a higher total liability/total asset ratio tend to be chosen as targets of in-in M&As. We also estimated the dynamic effects of M&As on target firms. The results indicate that out-in M&As improve target firms' TFP level and current profit/sales ratio. Compared with in-in M&As, out-in M&As bring a larger and quicker improvement in TFP and the profit rate but no increase in target firms' employment two years after the acquisition.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.rieti.go.jp/jp/publications/dp/05e005.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 05005.

as in new window
Length: 45 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:eti:dpaper:05005

Contact details of provider:
Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
Phone: +81-3-3501-1363
Fax: +81-3-3501-8577
Email:
Web page: http://www.rieti.go.jp/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David H. Good & M. Ishaq Nadiri & Robin C. Sickles, 1996. "Index Number and Factor Demand Approaches to the Estimation of Productivity," NBER Working Papers 5790, National Bureau of Economic Research, Inc.
  2. Kyoji Fukao & Keiko Ito, 2003. "Foreign Direct Investment and Services Trade: The Case of Japan," NBER Chapters, in: Trade in Services in the Asia Pacific Region, NBER East Asia Seminar on Economics (EASE), Volume 11, pages 429-480 National Bureau of Economic Research, Inc.
  3. Kyoji Fukao & Yukako Murakami, 2003. "Do Foreign Firms Bring Greater Total Factor Productivity to Japan?," Hi-Stat Discussion Paper Series d03-04, Institute of Economic Research, Hitotsubashi University.
  4. Blomstrom, Magnus & Sjoholm, Fredrik, 1999. "Technology transfer and spillovers: Does local participation with multinationals matter?1," European Economic Review, Elsevier, vol. 43(4-6), pages 915-923, April.
  5. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  6. Fukunari Kimura & Kozo Kiyota, 2007. "Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 31-48, 02.
  7. Conyon, Martin J, et al, 2002. "The Productivity and Wage Effects of Foreign Acquisition in the United Kingdom," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 85-102, March.
  8. Sang V. Nguyen & Michael Ollinger, 2006. "Mergers and Acquisitions and Productivity in the U.S. Meat Products Industries: Evidence from the Micro Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 606-616.
  9. Rachel Griffith & Helen Simpson, 2004. "Characteristics of Foreign-Owned Firms in British Manufacturing," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 147-180 National Bureau of Economic Research, Inc.
  10. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  11. Mark E. Doms & J . Bradford Jensen, 1998. "Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 235-258 National Bureau of Economic Research, Inc.
  12. Ito, Keiko & Fukao, Kyoji, 2005. "Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996," Journal of the Japanese and International Economies, Elsevier, vol. 19(3), pages 414-455, September.
  13. Steven Globerman & John C. Ries & Ilan Vertinsky, 1994. "The Economic Performance of Foreign Affiliates in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 143-56, February.
  14. Chin Hee Hahn, 2004. "Exporting and Performance of Plants: Evidence from Korean Manufacturing," NBER Working Papers 10208, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hyeog Ug Kwon, 2007. "Exprots, FDI, and Productivity: Evidence from Japanese Manufacturing Firms," Hi-Stat Discussion Paper Series d07-214, Institute of Economic Research, Hitotsubashi University.
  2. Kyoji Fukao & Keikok Ito & Hyeg Ug Kwon & Miho Takizawa, 2006. "Cross-Border Acquisitons and Target Firms' Performance: Evidence from Japanese Firm-Level Data," Hi-Stat Discussion Paper Series d06-174, Institute of Economic Research, Hitotsubashi University.
  3. ITO Keiko, 2011. "Entry of Foreign Multinational Firms and Productivity Growth of Domestic Firms: The case of Japanese firms," Discussion papers 11063, Research Institute of Economy, Trade and Industry (RIETI).
  4. Tatsuyoshi Miyakoshi & Pekka Ilmakunnas, 2009. "What decreases the TFP ? The aging labor and ICT imbalance," Discussion Papers in Economics and Business 09-03, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  5. Morikawa, Masayuki, 2010. "Labor unions and productivity: An empirical analysis using Japanese firm-level data," Labour Economics, Elsevier, vol. 17(6), pages 1030-1037, December.
  6. Fukao, Kyoji & Ito, Keiko & Kabe, Shigesaburo & Liu, Deqiang & Takeuchi, Fumihide, 2007. "Are Japanese Firms Failing to Catch up in Localization? An Empirical Analysis Based on Affiliate-level Data of Japanese Firms and a Case Study of the Automobile Industry in China," CEI Working Paper Series 2006-16, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  7. ITO Keiko & FUKAO Kyoji, 2007. "Determinants of the Profitability of Japanese Manufacturing Affiliates in China and Other Regions: Does Localization of Procurement, Sales, and Management Matter?," Discussion papers 07001, Research Institute of Economy, Trade and Industry (RIETI).
  8. Wu, Zai Bin & Yeung, Godfrey & Mok, Vincent & Han, Zhaozhou, 2007. "Firm-specific knowledge and technical efficiency of watch and clock manufacturing firms in China," International Journal of Production Economics, Elsevier, vol. 107(2), pages 317-332, June.
  9. Kyoji Fukao & Keiko Ito & Shigesaburo Kabe & Deqiang Liu & Fumihide Takeuchi, 2006. "Do Japanese Firms Fail to Catch up in Localization? An Empirical Analysis Based on Affiliate-level Data of Japanese Firms and a Case Study of Automobile Industry in China," Microeconomics Working Papers 21890, East Asian Bureau of Economic Research.
  10. Takechi, Kazutaka, 2013. "Understanding the productivity effect of M&A in Japan: An empirical analysis of the electronics industry from 1989 to 1998," Japan and the World Economy, Elsevier, vol. 25, pages 1-9.
  11. Antonios Georgopoulos & George Argyros & Giota Boura, 2008. "Which Targets Stimulate Cross-border Acquisitions? An Empirical Investigation of Industrial Organization and Trade Factors within a Competition Framework of International and Domestic Acquisition Targ," Journal of Industry, Competition and Trade, Springer, vol. 8(1), pages 55-72, March.
  12. Morikawa, Masayuki, 2013. "Productivity and survival of family firms in Japan," Journal of Economics and Business, Elsevier, vol. 70(C), pages 111-125.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:05005. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.