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Foreign Acquisition, Plant Survival, and Employment Growth

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  • Bandick, Roger

    ()
    (Aarhus School of Business)

  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

Abstract

This paper analyses the effect of foreign acquisition on survival probability and employment growth of target plant using data on Swedish manufacturing plants during the period 1993-2002. An improvement over previous studies is that we take into account firm level heterogeneity by separating the targeted plants into those within Swedish MNEs, Swedish exporting non-MNEs, and purely domestic firms before foreign takeover. The results, controlling for possible endogeneity of the acquisition dummy using an IV and propensity score matching approach suggest that acquisition by foreign owners increases the lifetime of the acquired plants only if the plant was an exporter. The effect differs depending on whether the acquisition is horizontal or vertical. We also find robust positive employment growth effects only for exporters, and only if the takeover is vertical, not horizontal.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4226.

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Length: 39 pages
Date of creation: Jun 2009
Date of revision:
Publication status: published in: Canadian Journal of Economics, 2010, 43(2), 547-573
Handle: RePEc:iza:izadps:dp4226

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Keywords: employment growth; plant survival; acquisitions; multinational enterprises;

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Cited by:
  1. Anna Maria Ferragina & Fernanda Mazzotta & Erol Taymaz & Kamil Yilmaz, 2013. "The Impact Of Fdi On Firm Survival And Employment: A Comparative Analysis For Turkey And Italy," ERSA conference papers ersa13p1211, European Regional Science Association.
  2. Joachim Wagner, 2011. "Productivity and International Firm Activities: What do we know?," Working Paper Series in Economics 194, University of Lüneburg, Institute of Economics.
  3. Maria Garcia-Vega & Alessandra Guariglia, . "Volatility, Financial Constraints, and trade," Discussion Papers 07/33, University of Nottingham, GEP.
  4. Spaliara, Marina-Eliza & Tsoukas, Serafeim, 2013. "What matters for corporate failures in Asia? Exploring the role of firm-specific characteristics during the Asian crisis," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 26(C), pages 83-96.
  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. Ronald Bachmann & Daniel Baumgarten & Joel Stiebale, 2011. "Cross-border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0268, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Richard Fabling & Lynda Sanderson, 2011. "Foreign acquisition and the performance of New Zealand firms," Reserve Bank of New Zealand Discussion Paper Series DP2011/08, Reserve Bank of New Zealand.
  8. Fernandes, Ana M. & Paunov, Caroline, 2012. "The risks of innovation : are innovating firms less likely to die ?," Policy Research Working Paper Series 6103, The World Bank.
  9. Benjamin Furlan & Harald Oberhofer & Hannes Winner, 2014. "A Note on Merger and Acquisition Evaluation," WIFO Working Papers, WIFO 462, WIFO.
  10. Tsoukas, Serafeim, 2011. "Firm survival and financial development: Evidence from a panel of emerging Asian economies," Journal of Banking & Finance, Elsevier, Elsevier, vol. 35(7), pages 1736-1752, July.
  11. Natália Pimenta Monteiro & Geoff Stewart, 2013. "Scale, Scope and Survival: A Comparison of Cooperative and Capitalist Modes of Production," NIPE Working Papers, NIPE - Universidade do Minho 08/2013, NIPE - Universidade do Minho.
  12. Bruce Blonigen & Benjamin Liebman & Wesley Wilson, 2013. "Antidumping and Production-Line Exit: The Case of the US Steel Industry," Review of Industrial Organization, Springer, Springer, vol. 42(4), pages 395-413, June.

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