Foreign ownership and firm performance: Evidence from Japan's electronics industry

Pascal Nguyen (1, 2) , Makoto Nakano (3)

1 Axe 2 (2011-2016) : « Marchés, Cultures de consommation, Autonomie et Migrations » (MSHS Poitiers)
2 UTS - University of Technology Sydney
3 Faculty of Commerce and Management

Foreign investors have in recent years increased their ownership of Japanese firms. Has this greater involvement contributed to improve firm performance? We show that the answer depends on the assumptions regarding the unobservable firm effects. If the latter are assumed to be time invariant, as in most existing studies, the influence of foreign investors appears to be positive. However, unobserved firm characteristics are unlikely to be constant in the case of electronics firms. Using dynamic panel data estimation, we show that the effect of foreign ownership on operating profits has been initially insignificant, but is starting to show up strongly in the more recent period. On the other hand, the immediate impact has been to raise expectations about future firm performance.

Mots clés: dynamic panel; GMM; foreign investors; performance; unobserved heterogeneity

Domaines: Economies et finances

Pascal Nguyen, Makoto Nakano. Foreign ownership and firm performance: Evidence from Japan's electronics industry. Applied Financial Economics, 2013, 23/2013 (1), pp.41-50. ⟨10.1080/09603107.2012.705425⟩. ⟨halshs-01368966⟩