Finance-specific Factors as Drivers of Cross-border Investment - An OLI perspective
Dokumenttyp: Working paper
Förlag: IFN Working Paper, No 767
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.
- Business and Economics
- cross-border acquisitions
- cost of capital
- financial strategy
- financial variables.