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Finance-specific factors as drivers of cross-border investment - An empirical investigation

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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 foreign direct investment (FDI) determinants, 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. (C) 2008 Elsevier Ltd. All rights reserved.

Publishing year

2008

Language

English

Pages

630-641

Publication/Series

International Business Review

Volume

17

Issue

6

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics and Business

Keywords

  • OLI
  • Cost of capital
  • Financial variables
  • Cross-border acquisitions
  • FDI
  • Financial strategy
  • LISTINGS

Status

Published

ISBN/ISSN/Other

  • ISSN: 1873-6149