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Do Foreign Mergers & Acquisitions Boost Firm Productivity?

  • Schiffbauer, Marc

    (ESRI)

  • Siedschlag, Iulia

    (ESRI)

  • Ruane, Frances

    (ESRI)

This paper examines the causal relationship between foreign mergers and acquisitions and firm productivity in the UK over the period 1999-2007. Our results raise questions about the existence of aggregate effects of foreign ownership on TFP in the longer-run. However, we find significant heterogeneity in the TFP effects of foreign M&A at the industry level. Overall, we uncover a systematic pattern of post-acquisition TFP effects that is consistent with the most recent theoretical models of firm heterogeneity and cross-border mergers and acquisitions as mode of foreign entry. Furthermore, we find positive aggregate effects on labor productivity due to capital deepening but not due to changes in TFP.

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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG47.

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Length: 40 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:esr:wpaper:dynreg47
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