Kiel Working Papers, Kiel Institute for World Economics
No 1525:
Foreign acquisition, plant survival, and employment growth
Roger Bandick and Holger Görg
Abstract: This paper analyses the effect of foreign acquisition on
survival probability and employment growth of target plant using data on
Swedish manufacturing plants during the period 1993-2002. An improvement
over previous studies is that we take into account firm level heterogeneity
by separating the targeted plants into those within Swedish MNEs, Swedish
exporting non-MNEs, and purely domestic firms before foreign takeover. The
results, controlling for possible endogeneity of the acquisition dummy
using an IV and propensity score matching approach suggest that acquisition
by foreign owners increases the lifetime of the acquired plants only if the
plant was an exporter. The effect differs depending on whether the
acquisition is horizontal or vertical. We also find robust positive
employment growth effects only for exporters, and only if the takeover is
vertical, not horizontal
Keywords: acquisition, plant survival, employment growth, multinational enterprises; (follow links to similar papers)
JEL-Codes: F23,; L23; (follow links to similar papers)
24 pages, June 2009
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