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Foreign acquisition, plant survival, and employment growth

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  • Roger Bandick
  • Holger Görg

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 Kiel Institute for the World Economy in its series Kiel Working Papers with number 1525.

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Length: 24 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:kie:kieliw:1525

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

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References

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  1. Coles, Jeffrey & Lemmon, Michael & Meschke, Felix, 2007. "Structural Models and Endogeneity in Corporate Finance: the Link Between Managerial Ownership and Corporate Performance," MPRA Paper 4374, University Library of Munich, Germany, revised 15 Feb 2007.
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Citations

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Cited by:
  1. Serafeim Tsoukas, 2012. "Firm Survival and Financial Development: Evidence from a Panel of Emerging Asian Economies," Working Papers 142012, Hong Kong Institute for Monetary Research.
  2. Natália Pimenta Monteiro & Geoff Stewart, 2013. "Scale, Scope and Survival: A Comparison of Cooperative and Capitalist Modes of Production," NIPE Working Papers 08/2013, NIPE - Universidade do Minho.
  3. Wagner, Joachim, 2011. "Productivity and International Firm Activities: What Do We Know?," IZA Policy Papers 23, Institute for the Study of Labor (IZA).
  4. 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.
  5. Ronald Bachmann & Daniel Baumgarten & Joel Stiebale, 2011. "Cross-border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany," Ruhr Economic Papers 0268, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. Richard Fabling & Lynda Sanderson, 2011. "Foreign Acquisition and the Performance of New Zealand Firms," Treasury Working Paper Series 11/06, New Zealand Treasury.

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