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Which firms do foreigners buy : evidence from the Republic of Korea

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  • Freund, Caroline
  • Djankov, Simeon

Abstract

Using data on mergers and acquisitions involving Korean firms, the authors identify which sectors and firms attracted foreign investment after the liberalization of investment of activity at the end of 1997. They find that domestic acquisitions are similar to foreign acquisitions by sector (of both the target and the acquiring firm), but that international transactions are larger than Korean transactions. This suggests that consolidation is a two-stage process: Firms consolidate first domestically, then internationally. The authors also find that foreign investment is focused on high-value-added sectors, on larger and more profitable firms, on firms with low debt, and on firms that export a large share of output. Their results suggest that growth induces foreign investment.

Suggested Citation

  • Freund, Caroline & Djankov, Simeon, 2000. "Which firms do foreigners buy : evidence from the Republic of Korea," Policy Research Working Paper Series 2450, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2450
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    References listed on IDEAS

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    Cited by:

    1. Ayyagari, Meghana, 2004. "Does cross-listing lead to functional convergence? Empirical evidence," Policy Research Working Paper Series 3264, The World Bank.
    2. Christian Bellak, 2004. "How Domestic and Foreign Firms Differ and Why Does it Matter?," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 483-514, September.
    3. Jun, Jong-Kun & Hyun, Jae Hoon, 2014. "Anticipation or risk aversion? The effects of the EU enlargement on Korean trade and FDI activities in Central and Eastern Europe," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 19(4), pages 486-503.
    4. Froese, Fabian Jintae & Pak, Yong Suhk & Chong, Li Choy, 2008. "Managing the human side of cross-border acquisitions in South Korea," Journal of World Business, Elsevier, vol. 43(1), pages 97-108, January.
    5. Radu Musetescu & Adina Musetescu & Dana Gardu, 2007. "Developmental State, Business Concentrations and Financial Repression: the case of the Republic of Korea," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 10(23), pages 45-62, June.
    6. Bykova, Anna & Jardon, Carlos M., 2017. "Lean against the wind: The moderation effect of foreign investments during the economic recession in Russia," Journal of Economics and Business, Elsevier, vol. 93(C), pages 1-14.

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