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On Productivity and Plant Ownership Change: New Evidence From the LRD

  • Sang V Nguyen
  • Robert H Mcguckin

This paper investigates the questions of what type of establishment experiences ownership change, and how the transferred properties perform after acquisition. Are they the profitable operations suggested by Ravenscraft and Scherer (1986), or the poorly operating ones found by Lichtenberg and Siegel (1992)? Is the primary motive of ownership change the rehabilitation of low productivity plants as suggested by Lichtenberg and Siegel? Our empirical work is based on an unbalanced panel of 28,294 plants taken from the U.S. Bureau of the Census' Longitudinal Research Database ( LRD ). The data set provides complete coverage of the food manufacturing industry (SIC 20) for the period 1977-1987. Our principle findings are that (1) ownership change is generally associated with the transfer of plants with above average productivity, however, large plants, empirically, those with more than 200 employees, are more likely to be purchased than closed when they are performing poorly; and (2) transferred plants experience improvement in productivity performance following the ownership change.

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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 93-15.

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Date of creation: Nov 1993
Date of revision:
Handle: RePEc:cen:wpaper:93-15
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  1. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers 88-2, Center for Economic Studies, U.S. Census Bureau.
  2. Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-94, April.
  3. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  4. Thomas A Abbott Iii, 1989. "Price Dispersion in U.S. Manufacturing," Working Papers 89-7, Center for Economic Studies, U.S. Census Bureau.
  5. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
  6. repec:oup:qjecon:v:104:y:1989:i:4:p:671-98 is not listed on IDEAS
  7. repec:oup:qjecon:v:83:y:1969:i:4:p:643-59 is not listed on IDEAS
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