Finance-specific Factors as Drivers of Cross-border Investment – An OLI Perspective
AbstractIn this paper we empirically test the role of firm-specific financial characteristics as drivers of international investment and production. We hypothesize that financial strength generates advantages that can be exploited through cross-border investment activity. The hypothesis is tested in a series of binary-response models, using a sample of 1379 European non-financial firms’ international acquisitions. Controlling for traditional firm- and target-country-specific FDI determinants within an OLI framework, we find strong evidence that financial factors play a significant role in explaining cross-border investment. We conclude that without explicit consideration of the financial dimension, firms’ FDI decisions cannot be properly understood.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 767.
Length: 34 pages
Date of creation: 24 Sep 2008
Date of revision:
Publication status: Published as Forssbaeck, Jens and Lars Oxelheim, 'Finance-specific Factors as Drivers of Cross-border Investment – An OLI Perspective' in International Business Review, 2008, pages 630-641.
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More information through EDIRC
FDI; OLI; Cross-border Acquisitions; Cost of Capital; Financial Strategy; Financial Variables;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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