Advanced Search
MyIDEAS: Login to save this paper or follow this series

Credit Constraints, Foreign Ownership, and Foreign Takeovers in Germany

Contents:

Author Info

  • Joachim Wagner

    ()
    (Leuphana University Lueneburg, Germany)

  • John P. Weche Geluebcke

    ()
    (Leuphana University Lueneburg, Germany)

Abstract

In this paper we present the first evidence for a link between foreign ownership and credit constraints for Germany, one of the world's leading target countries for foreign direct investment. Furthermore, we contribute to the literature by investigating the impact of a foreign acquisition on the target firms' credit constraints for the first time. We use newly available comprehensive panel data that we constructed from information collected by the German statistical oces and from credit rating scores supplied by the leading German credit rating agency. We find foreign owned firms in German manufacturing on average to show slightly more financing restrictions than domestically owned enterprises, but this very small difference diminishes once unobserved heterogeneity is taken into account. We further demonstrate that one reason for this finding is the preference of foreign investors for targets with relatively low credit-worthiness. Although the likelihood of a foreign acquisition appears to be correlated with credit constraints, there is no impact of foreign takeovers on the credit constraints of the target firms ex post and therefore no support for the hypothesis that foreign takeovers ease financial frictions.

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.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ifvwl/WorkingPapers/wp_283_Upload.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 283.

as in new window
Length: 38 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:lue:wpaper:283

Contact details of provider:
Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: credit constraints; foreign ownership; acquisitions; Germany;

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. Christian Arndt & Claudia M. Buch & Anselm Mattes, 2012. "Disentangling barriers to internationalization," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 41-63, February.
  2. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, StataCorp LP, vol. 9(3), pages 439-453, September.
  3. Sarah Bridges & Alessandra Guariglia, 2008. "Financial Constraints, Global Engagement, And Firm Survival In The United Kingdom: Evidence From Micro Data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 444-464, 09.
  4. Maria Angelica Arbelaez & Juan Jose Echavarria, 2002. "Credit, Financial Liberalization and Manufacturing Investment in Colombia," Research Department Publications, Inter-American Development Bank, Research Department 3145, Inter-American Development Bank, Research Department.
  5. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does It Matter?," Department of Economics Working Papers wuwp087, Vienna University of Economics, Department of Economics.
  6. Sandra PONCET & Walter STEINGRESS & Hylke VANDENBUSSCHE, 2009. "Financial constraints in China: firm-level evidence," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  7. Imbens, Guido W. & Wooldridge, Jeffrey M., 2008. "Recent Developments in the Econometrics of Program Evaluation," IZA Discussion Papers 3640, Institute for the Study of Labor (IZA).
  8. Wagner, Joachim, 2012. "Credit constraints and exports: Evidence for German manufacturing enterprises," Working Paper Series in Economics and Institutions of Innovation 286, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  9. John P. Weche Geluebcke, 2011. "The Performance of Foreign Affiliates in German Manufacturing: Evidence from a new Database," Working Paper Series in Economics 216, University of Lüneburg, Institute of Economics.
  10. Michael Konold, 2007. "European Data Watch: New possibilities for economic research through integration of establishment-level panel data of German official statistics," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 127(2), pages 321-334.
  11. Claudia M. Buch & Iris Kesternich & Alexander Lipponer, 2009. "Financial Constraints and the Margins of FDI," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 54, Institut für Angewandte Wirtschaftsforschung (IAW).
  12. Christian Bellak & Michael Pfaffermayr & Michael Wild, 2006. "Firm Performance after Ownership Change: A Matching Estimator Approach," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 52(1), pages 29-54.
  13. Vincenzo Verardi & Joachim Wagner, 2010. "Robust Estimation of Linear Fixed Effects Panel Data Models with an Application to the Exporter Productivity Premium," Working Paper Series in Economics 168, University of Lüneburg, Institute of Economics.
  14. Fabio Schiantarelli & Alessandro Sembenelli, 2000. "Form of Ownership and Financial Constraints:Panel Data Evidence From Flow of Funds and Investment Equations," Empirica, Springer, Springer, vol. 27(2), pages 175-192, June.
  15. Guariglia, Alessandra & Mateut, Simona, 2010. "Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data," Journal of Macroeconomics, Elsevier, Elsevier, vol. 32(1), pages 239-250, March.
  16. Schnitzer, Monika & Buch, Claudia M. & Kesternich, Iris & Lipponer, Alexander, 2010. "Exports Versus FDI Revisited: Does Finance Matter," Munich Reprints in Economics, University of Munich, Department of Economics 19883, University of Munich, Department of Economics.
  17. Thomas Chaney, 2013. "Liquidity Constrained Exporters," NBER Working Papers 19170, National Bureau of Economic Research, Inc.
  18. Maria Caterina Bramati & Christophe Croux, 2007. "Robust estimators for the fixed effects panel data model," Econometrics Journal, Royal Economic Society, vol. 10(3), pages 521-540, November.
  19. John P. Weche Geluebcke, 2011. "Ownership Patterns and Enterprise Groups in German Structural Business Statistics," Working Paper Series in Economics 212, University of Lüneburg, Institute of Economics.
  20. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 711-744.
  21. Kaplan, Steven N & Zingales, Luigi, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(1), pages 169-215, February.
  22. Villa, Juan M., 2012. "Simplifying the estimation of difference in differences treatment effects with Stata," MPRA Paper 43943, University Library of Munich, Germany.
  23. Mirabelle Muûls, 2008. "Exporters and credit constraints. A firm-level approach," Working Paper Research, National Bank of Belgium 139, National Bank of Belgium.
  24. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
  25. Frank R. Lichtenberg & Donald Siegel, 1987. "Productivity and Changes in Ownership of Manufactoring Plants," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 643-684.
Full references (including those not matched with items on IDEAS)

Citations

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:lue:wpaper:283. 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: (Joachim Wagner).

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.