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

John P. Weche

No 240, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: 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.

Keywords: Foreign ownership; Germany; acquisition; firm performance; services; inward FDI; multinational firms; productivity (search for similar items in EconPapers)
JEL-codes: F21 F23 G34 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Foreign and Domestic Takeovers in Germany: Cherry-picking and Lemon-grabbing (2013)
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