Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance

35 Pages Posted: 20 Apr 2016

See all articles by Laura Alfaro

Laura Alfaro

Harvard University

Maggie Xiaoyang Chen

George Washington University

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2012

Abstract

This paper examines how different establishments performed during the recent global financial crisis, focusing on the role of foreign ownership. The paper investigates how foreign ownership affected establishments' responses to negative economic shocks, using a cross-country panel dataset with detailed information on operation, location and industry for more than 12 million establishments from 2005-2008. The evidence shows that multinational subsidiaries on average fared better than local counterfactuals with similar economic characteristics. Among multinational subsidiaries, establishments with stronger production and financial linkages with parent companies showed greater resilience. Finally, in contrast to the crisis period, the impact of foreign ownership and linkages on an establishment's performance was insignificant in non-crisis years.

Keywords: Economic Theory & Research, Investment and Investment Climate, Bankruptcy and Resolution of Financial Distress, Emerging Markets, Economic Conditions and Volatility

Suggested Citation

Alfaro, Laura and Chen, Maggie Xiaoyang, Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance (January 1, 2012). World Bank Policy Research Working Paper No. 5946, Available at SSRN: https://ssrn.com/abstract=1984501

Laura Alfaro

Harvard University ( email )

Cambridge, MA 02138
United States

Maggie Xiaoyang Chen

George Washington University ( email )

710 21st Street NW
Washington, DC 20052
United States

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