Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing

Research output: Working paperWorking papers

Authors

This study focuses on ex ante performance of domestic and foreign takeover targets in Germany, one of the most important FDI infl ow destinations worldwide. Using a new database from German offcial statistics, unconditional comparisons as well as binary response model estimations of takeover probabilities were performed for the manufacturing and service sector separately. The results showed a diametrically opposing impact of productivity and profitability on the takeover likelihood. This offers a conciliation of two supposedly opponent hypotheses, known as 'cherry-picking' and 'lemon-grabbing'. The results advocate assumptions of asset-exploiting and information asymmetries in favor of domestic investors but differ only marginally between foreign and domestic targets.
Original languageEnglish
Place of PublicationLüneburg
PublisherInstitut für Volkswirtschaftslehre der Universität Lüneburg
Number of pages28
Publication statusPublished - 2012

    Research areas

  • Economics - foreign ownership, Germany, acquisition, firm performance, services, inward FDI, multinational firms, productivity

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