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Evaluating the Causal Effect of Foreign Acquisition on Domestic Performances: The Case of Slovenian Manufacturing Firms

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  • Sergio Salis

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    Abstract

    This paper investigates the impact of foreign acquisition in 1997 on the performances of a sample of Slovenian manufacturing firms. It uses the propensity score-matching estimation technique combined with the difference-in-differences approach to control for the potential bias arising from the non-random selection of acquired firms (endogeneity of foreign ownership). After confirming that foreign investors acquire the most productive firms in Slovenia, it shows that the productivity of such firms subsequently increases as a result of foreign takeover. This finding is consistent with the hypothesis that foreign firms transfer their technology to Slovenian affiliates.

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    File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp803.pdf
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    Bibliographic Info

    Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp803.

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    Length: pages
    Date of creation: 01 Jan 2006
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    Handle: RePEc:wdi:papers:2006-803

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    Keywords: Foreign acquisition; productivity; propensity score; matching estimator;

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    4. Brian Aitken & Ann Harrison & Robert E. Lipsey, 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States," NBER Working Papers 5102, National Bureau of Economic Research, Inc.
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    17. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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