Blessing Or Curse?: Domestic Plants' Survival and Employment Prospects After Foreign Acquisition
Centre for Economic Policy Research, 2001 - Consolidation and merger of corporations - 30 pages
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.
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acquired domestic plant acquired establishments acquired plants acquisition dummy acquisition yields acquisitions on employment analysis Annual Respondents Database Assisted Area Audretsch baseline hazard CEPR coefficient control group covariates denote statistical significance Discussion Papers domestic establishments dummy variable effect of foreign efficiency errors in parentheses evidence that foreign exogeneity foreign acquirers foreign acquisitions foreign direct investment foreign establishments foreign firm foreign owner foreign takeover Foreign(t given the concerns growth rate Hausman test hazard function hazard of exiting hazard ratio incidence of acquisition including a dummy instrumental variable job losses labour productivity McGuckin and Nguyen output growth ownership change percent level respectively percentage point plant age plant survival possible endogeneity probit model productivity levels proportional hazard model Respondents Database ARD sample Size2 skilled labour standard errors standard hazard model subscription survival and employment survival function survival prospects Table take-over reduces UK electronics industry University of Nottingham unskilled labour Wage growth