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Finance-specific Factors as Drivers of Cross-border Investment - An OLI perspective

Forssbaeck, Jens LU and Oxelheim, Lars LU (2008)
Abstract
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... (More)
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. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working Paper
publication status
unpublished
subject
keywords
FDI, OLI, cross-border acquisitions, cost of capital, financial strategy, financial variables.
publisher
IFN Working Paper series
language
English
LU publication?
yes
id
47c81799-39cb-4d75-80bc-0b329f850c57 (old id 1514175)
date added to LUP
2009-12-30 10:17:51
date last changed
2016-04-16 07:57:23
@misc{47c81799-39cb-4d75-80bc-0b329f850c57,
  abstract     = {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.},
  author       = {Forssbaeck, Jens and Oxelheim, Lars},
  keyword      = {FDI,OLI,cross-border acquisitions,cost of capital,financial strategy,financial variables.},
  language     = {eng},
  publisher    = {ARRAY(0x7d38700)},
  title        = {Finance-specific Factors as Drivers of Cross-border Investment - An OLI perspective},
  year         = {2008},
}