Finance-specific factors as drivers of cross-border investment - An empirical investigation

Research output: Contribution to journalArticle


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. (C) 2008 Elsevier Ltd. All rights reserved.


Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics and Business


  • OLI, Cost of capital, Financial variables, Cross-border acquisitions, FDI, Financial strategy, LISTINGS
Original languageEnglish
Pages (from-to)630-641
JournalInternational Business Review
Issue number6
Publication statusPublished - 2008
Publication categoryResearch