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

John P. Weche

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2013, vol. 59, issue 4, 275-294

Abstract: This study provides comparative evidence on ex ante performance of domestic and foreign takeover targets in Germany for the first time. Germany is one of the most important FDI inflow destinations worldwide. Using a new database from German official statistics, unconditional comparisons as well as binary response model estimations of takeover probabilities were performed for the manufacturing and service sector separately. The results show 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 but differ only marginally between foreign and domestic targets.

Keywords: foreign ownership; Germany; acquisition; firm performance; services; inward FDI; multinational firms; productivity (search for similar items in EconPapers)
Date: 2013
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Working Paper: Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing (2012)
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