Foreign Acquisitions, Plant Survival, and Employment Growth

Univ. of Nottingham Research Paper No. 2009/13

40 Pages Posted: 13 Aug 2009

See all articles by Roger Bandick

Roger Bandick

Aarhus University - School of Business and Social Sciences; Aarhus University - School of Business and Social Sciences

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Date Written: June 1, 2009

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, plant survival, employment growth, multinational enterprises

JEL Classification: F23, L23

Suggested Citation

Bandick, Roger and Bandick, Roger and Gorg, Holger, Foreign Acquisitions, Plant Survival, and Employment Growth (June 1, 2009). Univ. of Nottingham Research Paper No. 2009/13, Available at SSRN: https://ssrn.com/abstract=1448548 or http://dx.doi.org/10.2139/ssrn.1448548

Roger Bandick (Contact Author)

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

Holger Gorg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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