Foreign-owned versus domestically-owned firms: evidence from Greece

Abstract

The aim of this paper is to investigate whether foreign-owned firms perform significantly better than domestically-owned firms using panel data for 177 Greek manufacturing and trading firms listed on the Athens Stock Exchange in Greece, for the period 1995-2000. The t-test results indicate that there are significant differences in terms of return on assets, return per employees, size, age and efficiency index. Moreover, the fixed effects method is applied to investigate if there are differences in those factors affecting the profitability of foreign-owned and domestically-owned firms. The Chow test proves that the two different groups exist. The results show that the profitability of domestically-owned firms increases when there is a high level of growth and an efficient use of borrowed capital, while the profitability of foreign-owned firms increases with an efficient use of sales promotion expenditures and an efficient access to the innovation activity of its parent organization, without spending on R&D in the host country.