In this paper we analyze the conditions under which a foreign direct investment (FDI) involves a net capital flow across countries. Frequently, foreign direct investment is financed in the host country without an international capital movement. We develop a model in which the optimal choice of...

This paper is motivated by the unparalleled increase in foreign direct investment to emerging market economies of the last 25 years. Using a large cross-country time-series data set, we evaluate the dependence of foreign direct investment on global factors, or worldwide sources of risk (i.e.,...

Several theories have been put forward by the researchers to explain foreign direct investment. However, no single theory fits the different types of direct investment or the investment made by a particular multinational corporation or country in any region. This paper traces the evolution of...

Measuring the impact of political risk on investment projects is one of the most vexing issues in international business. One popular approach is to assume that the sovereign yield spread captures political risk and to augment the project discount rate by this spread. We show that this approach...

We investigate whether characteristics of the home country capital market environment, such as information disclosure and investor rights protection, continue to affect ADRs cross-listed in the U.S. Using microstructure measures as proxies for adverse selection, we find that characteristics of...

Whereas international joint venture is a dominated strategy in the property rights theory of the firm, this article shows that it can be optimal in the presence of contractual and financial frictions. We use the data of Chinese foreign affiliates to test and support our key theoretical result...

We investigate the Dead Hand Proxy Put, a contractual innovation in corporate debt agreements that may impact hedge fund activism. We find the provision principally in loans, not bonds, and provide evidence linking adoption of the provision to hedge fund activism. Further, controlling for...

A number of authors demonstrate how good corporate governance can have a positive effect on the economic-financial performance of companies. On the contrary, mismanagement has often been blamed for fraud and corporate insolvency. This paper attempts to verify the extent to which the market, and...

Instruments of risk mitigation play an important role in managing country risk within the foreign direct investment (FDI) decision. Our study assesses country risk by state-dependent preferences and introduces futures contracts as a tool of risk mitigation. We show that country risk assessments...

This paper analyses the ownership structure of foreign affiliates of Spanish firms. In contrast to previous studies on the participation degree, the paper highlights the importance of the previous decision to invest abroad. To do so, an econometric model with a limited dependent variable helps...