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

Author Info

Listed author(s):
  • 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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File URL: http://www.fep.up.pt/investigacao/workingpapers/08.06.20_wp281.pdf
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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
Handle: RePEc:por:fepwps:281
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Keywords: Foreign Direct Investment; Cross Border Mergers and Acquisitions; Greenfield Investments;

Other versions of this item:

Find related papers by JEL classification:
  • 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

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  1. Erin Anderson & Hubert Gatignon, 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(3), pages 1-26, September.
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Cited by:

  1. David de Matias Batalla, 2016. "Factores Clave De Las Inversiones Grenfield Investment Españolas: Transferencia Internacional De Actividades De I+D”," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 25(2), pages 41-56.
  2. Desislava Dikova & Keith Brouthers, 2016. "International Establishment Mode Choice: Past, Present and Future," Management International Review, Springer, vol. 56(4), pages 489-530, August.
  3. Boateng, Agyenim & Hua, Xiuping & Uddin, Moshfique & Du, Min, 2014. "Home country macroeconomic factors on outward cross-border mergers and acquisitions: Evidence from the UK," Research in International Business and Finance, Elsevier, vol. 30(C), pages 202-216.

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