Corporate financial determinants of foreign direct investment
Author
Summary, in English
Financial market incompleteness and (partial) segmentation of financial markets internationally may endow some firms with a financial advantage which can be exploited through foreign direct investment. We argue that this advantage appears as a distinct cost-of-capital effect on FDI, and identify possible channels for such an effect. Using a sample of European firms’ cross-border acquisitions, and controlling for traditional firm-level determinants of FDI, we find strong support for a cost-of-equity effect, whereas the effect of debt costs is indeterminate. Moreover, financial FDI determinants are more important for firms with high knowledge intensity and for firms resident in relatively less financially developed countries.
Department/s
Publishing year
2011
Language
English
Pages
269-282
Publication/Series
Quarterly Review of Economics and Finance
Volume
51
Issue
3
Document type
Journal article
Publisher
Elsevier
Topic
- Business Administration
Keywords
- FDI
- Cross-border acquisitions
- Investment-q
- Cost of capital
- Cross-listing
- Segmentation
Status
Published
ISBN/ISSN/Other
- ISSN: 1062-9769