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Spillover effects of foreign takeover restrictions on corporate investment of peer firms: Evidence from CFIUS denials

Author

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  • Capkun, Vedran
  • Grazioli, Francesco

Abstract

The Committee on Foreign Investment in the United States (CFIUS) is a governmental body that can deny regulatory approval of foreign takeovers on national security grounds. We examine whether and how takeover restrictions imposed by CFIUS affect corporate investment of peer firms. We document a sharp increase in CFIUS denials of regulatory approval during the 2008–2019 period in which the Foreign Investment and National Security Act (FINSA) was in place. CFIUS denials are followed by a negative market reaction, a decrease in foreign takeovers, and a reduction in corporate investment across target firms’ industry peers. The decreases in corporate investment are more pronounced among peer firms that are financially constrained and that rely more on foreign investments. These findings deepen our understanding of the effects of foreign takeover restrictions on corporate investment of peer firms in the United States.

Suggested Citation

  • Capkun, Vedran & Grazioli, Francesco, 2026. "Spillover effects of foreign takeover restrictions on corporate investment of peer firms: Evidence from CFIUS denials," International Review of Law and Economics, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:irlaec:v:86:y:2026:i:c:s0144818826000128
    DOI: 10.1016/j.irle.2026.106332
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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