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

  • Sergio Salis

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    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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    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
    Date of revision:
    Handle: RePEc:wdi:papers:2006-803
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    16. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
    17. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
    18. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
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