Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81497
Authors: 
Forssbaeck, Jens
Oxelheim, Lars
Year of Publication: 
2008
Series/Report no.: 
IFN Working Paper 767
Abstract: 
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.
Subjects: 
FDI
OLI
Cross-border Acquisitions
Cost of Capital
Financial Strategy
Financial Variables
JEL: 
E22
F21
F23
L23
Document Type: 
Working Paper

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