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

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  • Paula Cristina da Silva Ferreira Neto Rodrigues

    ()
    (Universidade de Aveiro)

  • António Abílio Garrido Brandão

    ()
    (Faculdade de Economia, Universidade do Porto)

  • António de Melo Cerqueira

    ()
    (Faculdade de Economia, Universidade do 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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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 281.

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Length: 40 pages.
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:por:fepwps:281

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

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  1. Julian di Giovanni & Contact: iber@haas.berkeley.edu, 2003. "What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening," International Trade 0303002, EconWPA.
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