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Jens Forssbaeck

Associate professor, Programme director – Master of Finance

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Finance-specific Factors as Drivers of Cross-border Investment - An OLI perspective

Author

  • Jens Forssbaeck
  • Lars Oxelheim

Summary, in English

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.

Department/s

  • Institute of Economic Research
  • Department of Business Administration

Publishing year

2008

Language

English

Document type

Working paper

Publisher

IFN Working Paper series

Topic

  • Business Administration
  • Economics and Business

Keywords

  • FDI
  • OLI
  • cross-border acquisitions
  • cost of capital
  • financial strategy
  • financial variables.

Status

Unpublished