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Closure and Divestiture By Foreign Entrants: The Impact of Entry and Post-Entry Strategies

Pedro Portugal and José Mata ()

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: We analyze the longevity of foreign entrants explicitly considering two possible ways of exit: firm closure and capital divestiture. We find that entry and post-entry strategies affect the longevity of firms and of foreign equity holdings, but in different manners. While the ownership arrangements and organizational structure affect the likelihood of divestment, they exert no significant effect upon closure. The entry mode exerts opposite effects on the two modes of exit, greenfield entrants being more likely to shutdown, but less likely to be divested. Only human capital affects closure and divestment in the same manner. Firms with large endowments of human capital are less likely to exit, irrespective of the exit mode considered.

JEL-codes: L11 L60 (search for similar items in EconPapers)
Date: 1999
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Journal Article: Closure and divestiture by foreign entrants: the impact of entry and post‐entry strategies (2000) Downloads
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