Picking 'Lemons' or Picking 'Cherries'? Domestic and Foreign Acquisitions in Norwegian Manufacturing

27 Pages Posted: 4 Jun 2010

See all articles by Ragnhild Balsvik

Ragnhild Balsvik

Norwegian School of Economics (NHH) - Department of Economics

Stefanie Haller

University College Dublin (UCD)

Abstract

We compare the performance in employment, wages and productivity for domestic plants acquired by new domestic and foreign owners. Prospective foreign owners pick large, high-wage, high-productivity plants, while new domestic owners choose average performers of above-average size. Employment, labour productivity, and total factor productivity decline in domestic acquisition targets before acquisitions; only wages recover afterwards. Employment, wages and labour productivity increase after foreign acquisitions. The sample selection introduced by long-term comparisons and a focus on unique events introduces a downward bias into the results for domestic acquisitions and an upward bias for the foreign acquisitions.

Suggested Citation

Balsvik, Ragnhild and Haller, Stefanie, Picking 'Lemons' or Picking 'Cherries'? Domestic and Foreign Acquisitions in Norwegian Manufacturing. Scandinavian Journal of Economics, Vol. 112, No. 2, pp. 361-387, June 2010. Available at SSRN: https://ssrn.com/abstract=1616927 or http://dx.doi.org/10.1111/j.1467-9442.2010.01606.x

Ragnhild Balsvik (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Stefanie Haller

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland

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