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

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Author

Summary, in English

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.

Publishing year

2008

Language

English

Document type

Working paper

Publisher

IFN Working Paper series

Topic

  • Business Administration
  • Economics and Business

Keywords

  • FDI
  • OLI
  • cross-border acquisitions
  • cost of capital
  • financial strategy
  • financial variables.

Status

Unpublished