Which firms do foreigners buy : evidence from the Republic of Korea

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Which firms do foreigners buy : evidence from the Republic of Korea, Volume 1

Author:	Freund, Caroline; Djankov, Simeon;	Collection Title:	Policy, Research working paper ; no. WPS 2450
Country:	Korea, Republic of;	Date Stored:	2000/12/13
Document Date:	2000/09/30	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Finance
Region:	East Asia and Pacific	Report Number:	WPS2450
Sub Sectors:	Other Finance	SubTopics:	Foreign Direct Investment; International Terrorism & Counterterrorism; Economic Theory & Research; Trade and Regional Integration; ICT Policy and Strategies
Volume No:	1

Summary: Using data on mergers and acquisitions involving Korean firms, the authors identify which sectors and firms attracted foreign investment after the liberalization of investment of activity at the end of 1997. They find that domestic acquisitions are similar to foreign acquisitions by sector (of both the target and the acquiring firm), but that international transactions are larger than Korean transactions. This suggests that consolidation is a two-stage process: Firms consolidate first domestically, then internationally. The authors also find that foreign investment is focused on high-value-added sectors, on larger and more profitable firms, on firms with low debt, and on firms that export a large share of output. Their results suggest that growth induces foreign investment.


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