Impact of characteristics of emerging market's firm on financing their outward foreign direct investment
by Vanita Tripathi; Sonal Thukral
International Journal of Public Sector Performance Management (IJPSPM), Vol. 4, No. 2, 2018

Abstract: In the wake of increasing outward foreign direct investment (OFDI) from emerging economies, their financing in the form of intra-company loans and equity is an interesting area of research. The purpose of the paper is to find the impact of characteristics of parent firm from emerging markets on the propensity of providing parent debt vs. parent equity to affiliates abroad that shapes its financing strategy in financing its outward foreign direct investment. By employing random effects probit model that control for time and industry effects, significance of profitability, size, and age of the firm subsumes, and the factors - growth opportunities available to parent firm, financial risk, R&D intensity, advertising intensity, and operating risk, besides systematic risk of the firm become significant drivers that shape the financing of OFDI.

Online publication date: Tue, 27-Mar-2018

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