UID:
almafu_9960787324402883
Format:
1 online resource (25 pages).
Series Statement:
Policy research working paper ; Volume 2450
Content:
September 2000 Growth induces foreign investment, which tends to focus on high-value-added sectors, on larger and more profitable firms, on firms with low debt, and on firms that export a large share of output. Using data on mergers and acquisitions involving Korean firms, Freund and Djankov identify which sectors and firms attracted foreign investment after the liberalization of investment activity at the end of 1997. They find that domestic acquisitions are similar to foreign acquisitions by sector (of both the target and the acquiring firm), but that international transactions are larger than Korean transactions. This suggests that consolidation is a two-stage process: Firms consolidate first domestically, then internationally. The authors also find that foreign investment is focused on high-value-added sectors, on larger and more profitable firms, on firms with low debt, and on firms that export a large share of output. Their results suggest that growth induces foreign investment. This paper-a product of the Financial Economics Unit, Financial Sector Strategy and Policy Department-is part of a larger effort in the department to study the effect of financial liberalization.
Language:
English
