Benefits of foreign ownership: Evidence from foreign direct investment in China

• 成果类型: Article
• 署名作者: Wang, Jian; Wang, Xiao
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Dallas; University of North Dakota Grand Forks
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2015.07.006
• 发表日期: 2015
• 页码: 325-338
• 关键词: foreign direct investment; Firm productivity; financial constraints; Mergers and Acquisitions; Difference in Differences; Propensity score matching

摘要

To examine the effect of foreign direct investment, this paper compares the post-acquisition performance changes of foreign- and domestic-acquired firms in China. Unlike previous studies, we investigate the purified effect of foreign ownership by using domestic-acquired firms as the control group. After controlling for the acquisition effect that exists in domestic acquisitions, we find no evidence that foreign ownership can bring additional productivity gains to target firms, though both foreign and domestic acquisitions bring productivity improvements to target firms. In contrast, a strong and robust finding is that foreign ownership significantly improves target firms' financial conditions and exports relative to domestic-acquired firms. Foreign acquisition is also found to improve output, employment and wages for target firms. These findings conflict with the conventional view of productivity-driven FDI and highlight the financial channel through which FDI benefits the host countries. (C) 2015 Elsevier B.V. All rights reserved.