Foreign ownership, foreign acquisitions and firm performance: Evidence from Sweden

Sammanfattning: Foreign ownership and its impact on firm performance is a subject of debate in academia and of great importance to policy makers and investors. In this study the relationship between foreign ownership and target firm profitability is examined. Two models are applied to data on Swedish companies during the period 1998-2017. The first model is used to examine the difference in performance between domestic and foreign subsidiaries, that can be attributed to different owner types. In the second model, a propensity score matching method and a Difference-in-Differences regression design are combined to study the change in performance following a foreign acquisition. Taken together, the findings suggest that foreign acquisitions have a negative impact on target firm profitability and provide evidence that foreign firms are less profitable than domestic firms in Sweden. The results corroborate previous findings from recent research on European firms and contribute to a deeper understanding of the implications of Foreign Direct Investment in Sweden.