Multinational Firms and Plant Divestiture

Pehr-Johan Norbäck, Ayça Tekin-Koru and Andreas Waldkirch

MPRA Paper from University Library of Munich, Germany

Abstract: Multinational enterprises frequently start, acquire, close and divest affiliates. There is a large literature on restructuring, which focuses on start-ups and acquisitions. The empirical literature on plant survival usually provides evidence from a single country. In contrast, this paper uses detailed survey data of Swedish multinationals to examine the characteristics that result in plant divestiture at the affiliate, firm, industry, country and regional level. We provide propositions drawn on a straightforward model from Berg et al (2012) in which the primary motive to divest an affiliate is to finance other investments in the network of the MNC. In line with conclusions from our model, we find that larger affiliates are more likely to be divested and these affiliates are small relative to the other operations of the firm in the same country or region. We also find that divestiture begets divestiture, but acquisition does not, thus casting doubt on the notion of footloose multinationals. Several firm, industry and country characteristics also matter.

Keywords: Foreign Direct Investment; Multinationals; Divestiture (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-int
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https://mpra.ub.uni-muenchen.de/45957/1/MPRA_paper_45957.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/53375/1/MPRA_paper_53375.pdf revised version (application/pdf)

Related works:
Journal Article: Multinational Firms and Plant Divestiture (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:45957

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