The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments
AbstractWhen 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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Bibliographic InfoPaper provided by Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação in its series GEE Papers with number 0017.
Length: 41 pages
Date of creation: Aug 2009
Date of revision: Aug 2009
Foreign Direct Investment; Cross Border Mergers and Acquisitions; Greenfield Investments.;
Other versions of this item:
- Paula Cristina da Silva Ferreira Neto Rodrigues & António Abílio Garrido Brandão & António de Melo Cerqueira, 2008. "The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments," FEP Working Papers 281, Universidade do Porto, Faculdade de Economia do Porto.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-22 (All new papers)
- NEP-COM-2009-08-22 (Industrial Competition)
- NEP-INT-2009-08-22 (International Trade)
- NEP-MAC-2009-08-22 (Macroeconomics)
- NEP-SBM-2009-08-22 (Small Business Management)
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