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Does Foreign direct investment mode choice affect the value of the investing firm?

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  • Myeong-Hyeon Cho

Abstract

This study provides direct evidence of the effect of foreign direct investment-mode choice (acquisitions vs. joint ventures) on the value of the investing firm. Evidence shows that joint ventures, on average, tend to be a value-creating investment mode when firms make initial investments in new foreign countries. On the other hand, acquisitions tend to be, on average, a value-creating investment mode when firms make subsequent investments in countries where they have operating experiences. The findings, consistent with previous research regarding the relation between mode choice and long-run performance of the ventures in foreign host countries, suggest that the strategic choice of investment mode is critical to creating value for investing firm.

Suggested Citation

  • Myeong-Hyeon Cho, 1998. "Does Foreign direct investment mode choice affect the value of the investing firm?," Global Economic Review, Taylor & Francis Journals, vol. 27(4), pages 3-19.
    • Handle: RePEc:taf:glecrv:v:27:y:1998:i:4:p:3-19
    DOI: 10.1080/12265089808449743
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