Abstract
We conduct a conjoint experiment with a nationally representative sample of 3,010 US residents to assess their opinions on the acquisition of domestic companies by foreign firms. On average, US residents are 16 p.p. less likely to support a foreign firm as the preferred acquirer to an American company, compared to an identical domestic firm. We also show that there is a tension between nationalistic preferences and economic incentives. Still, it is quite hard for foreign firms to overcome their disadvantage by offering more favorable deal conditions. Additionally, we demonstrate that liability of foreignness (LOF) is considerably more complex than previously theorized by showing that LOF is not only a firm-level phenomenon, but also runs at the ownership level.
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