Working Paper: CEPR ID: DP7329
Authors: Roger Bandick; Holger Grg
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: acquisitions; employment growth; multinational enterprises; plant survival
JEL Codes: F23; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| foreign acquisition (F23) | no significant effects for domestic firms (F23) |
| foreign acquisition (F23) | plant survival (Q24) |
| foreign acquisition (F23) | employment growth (O49) |
| foreign acquisition (F23) | plant survival for exporters (Q37) |
| foreign acquisition (F23) | employment growth for exporters (F10) |