Working Paper: CEPR ID: DP2994
Authors: Sourafel Girma; Holger Grg
Abstract: This Paper investigates whether the acquisition of a domestic establishment by a foreign owner has any effects, positive or negative, on the survival prospects and employment growth of that plant. The empirical analysis uses data from the Annual Respondents Database (ARD) for the UK electronics industry for the period 1980 to 1993. Estimating a standard hazard model including a dummy variable for the incidence of acquisition yields the result that foreign take-over reduces the lifetime of the acquired plant. Estimations of the determinants of employment growth in domestic plants provide some evidence that the incidence of take-over reduces employment growth, in particular for unskilled labour. Both survival and employment growth estimations do not appear to be subject to endogeneity problems.
Keywords: Acquisitions; Employment Growth; Foreign Direct Investment; Survival
JEL Codes: C41; F23; L63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hazard of exiting the market (D52) | Employment growth (J23) |
| Foreign acquisition (F23) | Productivity in the long run (O49) |
| Plant efficiency (Q41) | Hazard of exiting the market (D52) |
| Foreign acquisition (F23) | Hazard of exiting the market (D52) |
| Foreign acquisition (F23) | Employment growth (J23) |