Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81166
Authors: 
Forssbæk, Jens
Oxelheim, Lars
Year of Publication: 
2008
Series/Report no.: 
IFN Working Paper 741
Abstract: 
We argue that mainstream FDI theory underplays financial motivations for interna-tional investment, and suggest several possible channels for a distinct cost-of-capital effect on FDI. Using a sample of European firms’ cross-border acquisitions, and controlling for traditional firm-level determinants of FDI, we find strong evidence in favor of a cost-of-equity effect, whereas the effect of debt costs is indeterminate. We further find that financial determinants are more important for firms originating in relatively less financially developed countries and for firms with high knowledge intensity.
Subjects: 
FDI
Cross-border Acquisitions
Investment-q
Cost of Capital
Cross-listing
Segmentation
JEL: 
E22
F21
F23
G30
L23
Document Type: 
Working Paper

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