Finance-specific Factors as Drivers of Cross-border Investment – An OLI Perspective
In this paper we empirically test the role of firm-specific financial characteristics as drivers of international investment and production. We hypothesize that financial strength generates advantages that can be exploited through cross-border investment activity. The hypothesis is tested in a series of binary-response models, using a sample of 1379 European non-financial firms’ international acquisitions. Controlling for traditional firm- and target-country-specific FDI determinants within an OLI framework, we find strong evidence that financial factors play a significant role in explaining cross-border investment. We conclude that without explicit consideration of the financial dimension, firms’ FDI decisions cannot be properly understood.
|Date of creation:||24 Sep 2008|
|Date of revision:|
|Publication status:||Published as Forssbaeck, Jens and Lars Oxelheim, 'Finance-specific Factors as Drivers of Cross-border Investment – An OLI Perspective' in International Business Review, 2008, pages 630-641.|
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