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International Financial Issues in the Pacific RimGlobal Imbalances, Financial Liberalization, and Exchange Rate Policy$
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Takatoshi Ito and Andrew K. Rose

Print publication date: 2008

Print ISBN-13: 9780226386829

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226387086.001.0001

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Cross-Border Acquisitions and Target Firms' Performance

Cross-Border Acquisitions and Target Firms' Performance

Evidence from Japanese Firm-Level Data

(p.347) 11 Cross-Border Acquisitions and Target Firms' Performance
International Financial Issues in the Pacific Rim
Kyoji Fukao, Keiko Ito, Hyeog Ug Kwon, Miho Takizawa
University of Chicago Press

This chapter analyzes foreign direct investment (FDI) into Japan. In particular, it examines whether a firm is chosen as an acquisition target based on its productivity level, profitability, and other characteristics. The results show no positive impact on target firms' return on assets in the case of both within-group in-in acquisitions and in-in acquisitions by domestic outsiders. Foreign acquisitions improved target firms' productivity and profitability more significantly and much faster than acquisitions by domestic firms. The positive effects of foreign acquisitions tend to be much larger in the case of the nonmanufacturing sector than in the case of the manufacturing sector.

Keywords:   foreign direct investment, Japan, productivity, profitability, acquisitions, foreign acquisitions, target firms

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