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Financial determinants of FDI

Forssbaeck, Jens LU and Oxelheim, Lars LU (2008)
Abstract
We argue that mainstream FDI theory underplays financial motivations for international investment, and suggest several possible channels for a distinct cost-of-capital effect on FDI. Using a sample of European firms’ cross-border acquisitions, and controlling for traditional firm-level determinants of FDI, we find strong evidence in favor of a cost-of-equity effect, whereas the effect of debt costs is indeterminate. We further find that financial determinants are more important for firms originating in

relatively less financially developed countries and for firms with high knowledge intensity.
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author
organization
publishing date
type
Working Paper
publication status
unpublished
subject
keywords
FDI, cross-border acquisitions, investment-q, cost of capital, crosslisting, segmentation
publisher
IFN Working Paper series
language
English
LU publication?
yes
id
644cb342-00b9-4888-a26b-0962fbac196a (old id 1514171)
date added to LUP
2009-12-30 10:15:35
date last changed
2016-08-31 15:00:43
@misc{644cb342-00b9-4888-a26b-0962fbac196a,
  abstract     = {We argue that mainstream FDI theory underplays financial motivations for international investment, and suggest several possible channels for a distinct cost-of-capital effect on FDI. Using a sample of European firms’ cross-border acquisitions, and controlling for traditional firm-level determinants of FDI, we find strong evidence in favor of a cost-of-equity effect, whereas the effect of debt costs is indeterminate. We further find that financial determinants are more important for firms originating in<br/><br>
relatively less financially developed countries and for firms with high knowledge intensity.},
  author       = {Forssbaeck, Jens and Oxelheim, Lars},
  keyword      = {FDI,cross-border acquisitions,investment-q,cost of capital,crosslisting,segmentation},
  language     = {eng},
  publisher    = {ARRAY(0x9356a00)},
  title        = {Financial determinants of FDI},
  year         = {2008},
}