TY - JOUR AU - Chari,Anusha AU - Chen,Wenjie AU - Dominguez,Kathryn M.E. TI - Foreign Ownership and Firm Performance: Emerging-Market Acquisitions in the United States JF - National Bureau of Economic Research Working Paper Series VL - No. 14786 PY - 2009 Y2 - March 2009 DO - 10.3386/w14786 UR - http://www.nber.org/papers/w14786 L1 - http://www.nber.org/papers/w14786.pdf N1 - Author contact info: Anusha Chari 301 Gardner Hall CB#3305, Department of Economics University of North Carolina at Chapel Hill Chapel Hill, NC 27599 Tel: 919/966-5346 E-Mail: achari@unc.edu Wenjie Chen Department of Economics Lorch Hall University of Michigan Ann Arbor, MI 48109 Tel: 734-846-3740 E-Mail: wenjiec@umich.edu Kathryn M.E. M. Dominguez University of Michigan Department of Economics and Ford School Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734-764-9498 Fax: 734-763-9181 E-Mail: kathrynd@umich.edu M2 - featured in NBER digest on 2009-06-01 AB - This paper examines the recent upsurge in foreign acquisitions of U.S. firms, specifically focusing on acquisitions made by firms located in emerging markets. Neoclassical theory predicts that, on net, capital should flow from countries that are capital-abundant to countries that are capital-scarce. Yet increasingly emerging market firms are acquiring assets in developed countries. Using transaction-specific acquisition data and firm-level accounting data we evaluate the post-acquisition performance of publicly traded U.S. firms that have been acquired by firms from emerging markets over the period 1980-2007. Our empirical methodology uses a difference-in-differences approach combined with propensity score matching to create an appropriate control group of non-acquired firms. The results suggest that emerging country acquirers tend to choose U.S. targets that are larger in size (measured as sales, total assets and employment), relative to matched non-acquired U.S. firms before the acquisition year. In the years following the acquisition, sales and employment decline while profitability rises, suggesting significant restructuring of the target firms. ER -