Working paper

Foreign Acquisition and the Performance of New Zealand Firms (WP 11/06)

Formats and related files

Authors: Richard Fabling and Lynda Sanderson


This paper examines the firm-level determinants of foreign acquisitions of New Zealand companies, and the consequences for both the purchased firms and the workers within those firms. We follow a combined propensity score matching and difference-in-differences approach to identify and address endogenous selection of acquisition targets. The results suggest that foreign firms tend to target high-performing New Zealand companies. Acquired firms then exhibit higher growth in average wages and output, relative to similar domestic firms, but do not appear in general to increase their productivity or capital intensity. We find no evidence of differential survival rates for recently acquired foreign firms.

This Working Paper is available in Adobe PDF format only initially. An HTML version will be available in due course.Data and charts used in this Working Paper are available in a MS Excel file. Using PDF Files Using MS Excel Files


The authors wish to thank Statistics New Zealand for access to the data, and Arthur Grimes, Jacques Poot and an anonymous referee for valuable suggestions.


This research uses data that was accessed while the authors were on secondment to Statistics New Zealand in accordance with security and confidentiality provisions of the Statistics Act 1975. Only people authorised by the Act are allowed to see data about a particular business or organisation. The results of this work have been confidentialised to protect individual businesses from identification. The analysis and interpretation of these results were undertaken while the authors were at the Reserve Bank of New Zealand and the Treasury. The opinions, findings, recommendations and conclusions expressed in this report are those of the authors. Statistics New Zealand, the Reserve Bank of New Zealand, Motu, the Treasury and the University of Waikato take no responsibility for any omissions or errors in the information contained here.

The results are based in part on tax data supplied by Inland Revenue to Statistics New Zealand under the Tax Administration Act 1994. This tax data must be used only for statistical purposes, and no individual information is published or disclosed in any other form, or provided back to Inland Revenue for administrative or regulatory purposes. Any person who had access to the unit-record data has certified that they have been shown, have read and have understood section 81 of the Tax Administration Act 1994, which relates to privacy and confidentiality. Any discussion of data limitations or weaknesses is not related to the data's ability to support Inland Revenue's core operationalrequirements.

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.