Cross-border M&As or Greenfield Investments:What affect choices between the two FDI entry modes?
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| Title | Cross-border M&As or Greenfield Investments:What affect choices between the two FDI entry modes?
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| Author | Li Shanmin and Li Chang |
| Organization | SUN YAT-SEN BUSINESS SCHOOL |
| Email | mnslsm@mail.sysu.edu.cn,charleschanglee@gmail.com |
| Key Words | FDI; Cross-border M&A; Greenfield Investment; Economic Growth; Real Option |
| Abstract | The Greenfield Investment and Cross-Border M&A are the two main ways in which the FDI investors entry the host countries. Former researches show that the two FDI entry modes lead to totally different affects to hosts countries; hence it’s practicably useful to figure out what factors affect the FDI investors’ choices between the two entry modes. By composing a three-stage real option model, we find out that these affecting factors are construction speed, economic growth, demand uncertainty and host countries’ policies, what’s more, we also find that the target firms of Cross-border M&A have larger scales than those of Greenfield investments. And all the above conclusions are confirmed by empirical tests. |
| Serial Number | WP425 |
| Time | 2013-02-21 |
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