Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2013-04-11
Revision-Date: 2020-02-24
Number: 13-058/IV
Author-Name: Christian Fons-Rosen
Author-Workplace-Name: Universitat Pompeu Fabra, Barcelona Graduate School of Economics
Author-Name: Sebnem Kalemli-Ozcan
Author-Workplace-Name: University of Maryland, CEPR, NBER
Author-Name: Bent E. Sorensen
Author-Workplace-Name: University of Houston, CEPR
Author-Name: Carolina Villegas-Sanchez
Author-Workplace-Name: ESADE, Universitat Ramon Llull
Author-Name: Vadym Volosovych
Author-Workplace-Name: Erasmus University Rotterdam and ERIM Research Institute of Management
Title: Quantifying Productivity Gains from Foreign Investment
Abstract: We revisit the relationship between foreign investment and productivity of acquired firms. First, we construct a panel firm-level dataset for eight advanced European countries covering domestic and foreign acquisitions together with detailed balance sheet information for the years 1999{2012. Second, we address the challenge of identifying a causal relation. To that end, we compare foreign to domestic acquisitions in addition to accounting for the impact of majority versus minority acquisitions after controlling for country and sector trends. The productivity of foreign acquired affiliates increases modestly after four years, but only when majority stakes are acquired by foreigners. Our results are driven by foreign acquisitions and not by foreign divestment.
Classification-JEL: E32; F15; F36; O16
Keywords: Multinationals, Selection, Majority Ownership, Advanced Countries
File-URL: https://papers.tinbergen.nl/13058.pdf
File-Format: application/pdf
File-Size: 851728 bytes
Handle: RePEc:tin:wpaper:20130058