Cross-Border Acquisitions and Target Firms' Performance

Edited by Kyoji Fukao, Keiko Ito, Hyeog Ug Kwon and Miho Takizawa

in International Financial Issues in the Pacific Rim

Published by University of Chicago Press

Published in print August 2008 | ISBN: 9780226386829
Published online February 2013 | e-ISBN: 9780226387086 | DOI:
Cross-Border Acquisitions and Target Firms' Performance

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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

Chapter.  16833 words.  Illustrated.

Subjects: Business and Management

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