Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Finance

No 2006-60: Foreign Ownership and long-term Survival

Dorte Kronborg and Steen Thomsen
Additional contact information
Dorte Kronborg: Department of Finance, Copenhagen Business School, Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark
Steen Thomsen: Department of Finance, Copenhagen Business School, Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark

Abstract: Does foreign ownership enhance or decrease a firm’s chances of survival? Over the 100 year period 1895-2001 this paper compares the survival of foreign subsidiaries in Denmark to a control sample matched by industry and firm size. We find that foreign-owned companies have higher survival probability. On average exit risk for domestic companies is 2.3 times higher than for foreign companies. First movers like Siemens, Philips, Kodak, Ford, GM or Goodyear have been active in the country for almost a century. Relative foreign survival increases with company age. However, the foreign survival advantage appears to be eroded by globalization, it decreases over time and disappears at the end of the century.

Keywords: na

JEL-codes: G32; L10; L22

32 pages, January 1, 2006

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