What drives capital flows? The case of cross-border M&A activity and financial deepening

• 成果类型: Article
• 署名作者: di Giovanni, J
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2003.11.007
• 发表日期: 2005
• 页码: 127-149
• 关键词: Mergers & Acquisitions; Cross-border; capital flows; financial deepening

摘要

What key roles do macroeconomic and financial variables play in the foreign direct investment (FDI) decision of firms? This question is addressed in this paper using a large panel data set of cross-border Merger & Acquisition (M&A) deals for the period 1990-1999. Various econometric specifications are built around the simple gravity model commonly used in the trade literature. Interestingly, financial variables and other institutional factors seem to play a significant role in M&A flows. In particular, the size of financial markets, as measured by the stock market capitalization to GDP ratio, has a strong positive association with domestic firms investing abroad. This result points to the importance of domestic financial conditions in stimulating international investment during the boom years of 1990s, and accords with the significant drop in cross-border M&As in recent years. (C) 2004 Elsevier B.V. All rights reserved.