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Foreign Acquisition, Wages and Productivity

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  • Bandick, Roger

    ()
    (Department of Economics, Aarhus School of Business)

Abstract

This paper studies the effect of foreign acquisition on wages and total factor productivity (TFP) in the years following a takeover by using unique detailed firm-level data for Sweden for the period 1993-2002. The paper takes particular account of the potential endogeneity of the acquisition decision (for example due to “cherry picking”) by implementing an instrumental variable approach and propensity score matching with difference-in-difference estimation technique. Moreover, in line with recent literature on firm heterogeneity in international trade, this paper allows for the acquisition effect to differ depending on whether the targeted firms were domestic multinational or non-multinationals before the foreign takeover. This paper also allows for the acquisition effect to differ depending on whether the acquisition is horizontal or vertical. The result shows that foreign acquisition has no effects on overall, skilled or less-skilled wage growth neither in targeted Swedish MNEs nor in targeted Swedish non-MNEs and neither if the acquisition was motivated by vertical or horizontal motives. However, the results indicate that both targeted Swedish MNEs and non- MNEs have better growth in TFP after vertical foreign acquisition only but no such impact from horizontal foreign acquisition

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Bibliographic Info

Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 10-21.

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Length: 32 pages
Date of creation: 01 Jan 2010
Date of revision:
Handle: RePEc:hhs:aareco:2010_021

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Related research

Keywords: heterogeneity; multinational enterprises; acquisitions; wage differentials; productivity; matching; difference-in-difference;

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Cited by:
  1. Bürker, Matthias & Franco, Chiara & Minerva, G. Alfredo, 2013. "Foreign ownership, firm performance, and the geography of civic capital," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(6), pages 964-984.
  2. Harald Oberhofer & Matthias Stöckl & Hannes Winner, 2012. "The Wage Premium of Globalisation: Evidence from European Mergers and Acquisitions," WIFO Working Papers, WIFO 416, WIFO.
  3. Gazaniol, Alexandre & Peltrault, Frédéric, 2011. "Going Multinational and Ownership: Evidence from French Matched Firms," Economics Papers from University Paris Dauphine 123456789/5444, Paris Dauphine University.
  4. John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing," Working Paper Series in Economics 240, University of Lüneburg, Institute of Economics.
  5. Joze P. Damijan & Crt Kostevc & Matija Rojec, 2012. "Growing lemons and cherries? Pre- and post-acquisition performance of foreign-acquired firms in new EU member states," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 31812, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  6. John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: First Comparative Evidence on the Post-acquisition Target Performance using new Data," Working Paper Series in Economics 249, University of Lüneburg, Institute of Economics.
  7. Wagner, Joachim, 2011. "Productivity and International Firm Activities: What Do We Know?," IZA Policy Papers, Institute for the Study of Labor (IZA) 23, Institute for the Study of Labor (IZA).

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