This paper utilizes micro panel data of firms located in Japan and examines differences in static and dynamic corporate performance between foreign-owned and domestically-owned firms in the 1990s. We find that foreign-owned firms not only reflect superior static characteristics but also achieve faster growth. In addition, foreign investors appear to invest in firms that may not be profitable immediately now but will potentially have better performance in the future. The results imply that foreign investors bring useful firm-specific assets into the Japanese market, which may work as an effective catalyst for necessary structural reform. (94 words
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