Author(s): Jens Forssbæck and Lars OxelheimYear: 2008
Title:
International Business Review
Volume (No.): 17 (6)
Pages: 630–641
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.
Reference:
Forssbæck, Jens and Lars Oxelheim (2008),
"Finance-specific Factors as Drivers of Cross-border Investment – An Empirical Investigation".
International Business Review
17(6),
630–641.