Patrik (2007), ‘Productivity Effects of Foreign Acquisitions

Abstract This study investigates how foreign acquisitions affect productivity in Swedish manufacturing firms. In order to isolate the causal effects due to a takeover we use a propensity score matching estimator to compare similar treated and untreated firms. We then apply the difference-in-difference estimator and show that there is a positive effect on productivity due to foreign acquisition. Foreign acquisitions increases the productivity in Swedish firms, resulting in adifference by between 3 and 9 percent depending on the estimator choosen and whether the firms are matched or not. Moreover, this productivity difference does not occur immediately but starts three years post acquisition. Foreign ownership is also found to boost productivity growth, not just the level of productivity. JEL Classification: F23, J3