The effect of investor protection on forms and ownership of FDI
by Sviatoslav A. Moskalev
International Journal of Economics and Business Research (IJEBR), Vol. 2, No. 6, 2010

Abstract: This paper investigates the effect of investor protection, political stability, financial development, trade openness, education and legal openness of foreign direct investment (FDI) regimes on forms and ownership of FDI in host countries. Host countries with stronger investor protection, more political safety and more open rules for foreign investment attract greater FDI inflows. This result holds after controlling for the various forms foreign investors use to enter host countries. These factors are shown to have a positive impact on the number of cross-border mergers and acquisitions (M&As) and joint ventures (JVs) that host countries receive. Patterns of ownership in cross-border M&As reveal that foreign acquirers are less likely to hold outright majority control if the target company is located in a country with less political stability, weaker investor protection and restrictive FDI regimes.

Online publication date: Sun, 03-Oct-2010

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