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The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments

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Author Info
Paula Neto () (ISCA, University of Aveiro)
António Brandão () (FEP, University of Porto)
António Cerqueira () (FEP, University of Porto)
Abstract

When a company decides to invest abroad, it can do it through the establishment of a new firm (greenfield investment) or by the purchase of an already existing firm. Although there is a vast empirical literature on the macroeconomic determinants of aggregate FDI, there are just a few studies examining the location-specific determinants of each entry mode. The aim of this study is to extend the previous work by Globerman and Shapiro (2005) through the analysis of panel data of 53 countries over the period 1996-2006, in order to identify the potential location-specific determinants of both M&A and greenfields. We have found evidence that there is a group of mode-encompassing variables which are common to all entry modes (such as economy’s size, openness, governance and human development index) and mode-specific variables. Investor’s protection and cultural variables seem to play an important role in the explanation of M&A and greenfields, respectively.

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File URL: http://www.gee.min-economia.pt/RePEc/WorkingPapers/pn17.pdf
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Publisher Info
Paper provided by Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação in its series GEE Papers with number 0017.

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Length: 41 pages
Date of creation: Aug 2009
Date of revision: Aug 2009
Handle: RePEc:mde:wpaper:0017

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Related research
Keywords: Foreign Direct Investment; Cross Border Mergers and Acquisitions; Greenfield Investments.;

Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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This page was last updated on 2009-11-14.

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