ON PRODUCTIVITY AND PLANT OWNERSHIP CHANGE - NEW EVIDENCE FROM THE LONGITUDINAL RESEARCH DATABASE

In this article we examine the type of establishment that experiences ownership change and how the transferred properties perform after acquisition. Our empirical work uses an unbalanced panel of 28,294 plants taken from the Longitudinal Research Database (LRD) for the period 1977-1987. We find that (1) ownership change is generally associated with the transfer of plants with above average productivity, but large plants are more likely to be purchased, rather than closed, when they are performing poorly; and (2) transferred plants experience improvement in productivity performance. These results suggest that the managerial-discipline theory cannot be used to explain most ownership changes.