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The Performance of UK Takeovers: Does the Nationality of Acquirers Matter?

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  • Aoife Hanley
  • Vasilios Zervos

Abstract

Using data for 755 acquisitions of manufacturing firms in the UK over a seven year period from 1990 to 1996, we find that the direct effect of an acquisition induces a labour productivity dip in the immediate aftermath of a takeover. This dip is seen for UK, US and the rest of the world acquisitions and is of the magnitude of between 6 and 9%. Similar to Harris and Robinson (2002) we conclude that the decline in productivity is consistent with the adjustment costs of acquisition.

Suggested Citation

  • Aoife Hanley & Vasilios Zervos, 2007. "The Performance of UK Takeovers: Does the Nationality of Acquirers Matter?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(2), pages 283-297.
    • Handle: RePEc:taf:ijecbs:v:14:y:2007:i:2:p:283-297
    DOI: 10.1080/13571510701344095
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    References listed on IDEAS

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    1. Sourafel Girma & Holger Görg, 2016. "Evaluating the foreign ownership wage premium using a difference-in-differences matching approach," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 2, pages 17-32, World Scientific Publishing Co. Pte. Ltd..
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    3. Rajah Rasiah, 2004. "Foreign Firms, Technological Capabilities and Economic Performance," Books, Edward Elgar Publishing, number 3553.
    4. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    5. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
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    Cited by:

    1. Siedschlag Iulia & Kaitila Ville & McQuinn John & Zhang Xiaoheng, 2014. "International Investment and Firm Performance: Empirical Evidence from Small Open Economies," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(6), pages 662-687, December.
    2. Kokko Ari & Söderlund Bengt & Tingvall Patrik Gustavsson, 2014. "Redirecting International Trade: Contracts, Conflicts, and Institutions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(6), pages 688-721, December.
    3. Schiffbauer, Marc & Siedschlag, Iulia & Ruane, Frances, 2017. "Do foreign mergers and acquisitions boost firm productivity?," International Business Review, Elsevier, vol. 26(6), pages 1124-1140.
    4. Fons-Rosen, Christian & Kalemli-Ozcan, Sebnem & Sørensen, Bent E. & Villegas-Sanchez, Carolina & Volosovych, Vadym, 2021. "Quantifying productivity gains from foreign investment," Journal of International Economics, Elsevier, vol. 131(C).
    5. Ragnhild Balsvik & Stefanie A. Haller, 2010. "Picking “Lemons” or Picking “Cherries”? Domestic and Foreign Acquisitions in Norwegian Manufacturing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 361-387, June.
    6. James Foreman-Peck & Tom Nicholls, 2013. "SME takeovers as a contributor to regional productivity gaps," Small Business Economics, Springer, vol. 41(2), pages 359-378, August.

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