FDI and the Role of Financial Market Quality

Reprint No. 2011:21

Author(s): Jens Forssbaeck and Lars OxelheimYear: 2011 Title: The Future of Foreign Direct Investment and the Multinational Enterprise Editor(s): Ravi Ramamurti and Niron HashaiPublisher: Emerald Group Publishing LtdCity: Bingley Pages: 85–109
Online article (restrictions may apply)

In this chapter we analyze the role of financial factors in the underlaking of cross-border acquisitions. We discuss financial firm-specific advantages as drivers of these acquisilions as well as the role of the development of the home financial market in exploiting these advantages. Based on a sample of 1,447 European firms' cross-border acquisitions amounting to a total of
566 acquisitions spanning from 0 to 18 for individual firms, we find strong evidence in favor of a cost-of-equity effect on the occurrence of FDI, whereas the stand-alone effect of debt costs is indeterminate. However, allowing firm-specific financial characteristics to be conditioned by homecountry financial development, both equity costs and debt Costs are found highly significant explanatory factors for cross-border acquisitions undertaken by the sample firms.

Forssbaeck, Jens and Lars Oxelheim (2011), "FDI and the Role of Financial Market Quality". Pp. 85–109 in Ravi Ramamurti and Niron Hashai, eds., The Future of Foreign Direct Investment and the Multinational Enterprise. Bingley: Emerald Group Publishing Ltd.

Lars Oxelheim


Ph: +46 8 665 4527
Mob: +46 70 861 9361

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

About the book


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se