Fire-sale FDI or Business as Usual?

Ron Alquist, Rahul Mukherjee and Linda Tesar ()

No 18837, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a new data set, we examine the characteristics and dynamics of cross-border mergers and acquisitions during emerging-market financial crises, that is, so-called "fire-sale FDI". Our findings shed fresh light on whether the transactions undertaken during crisis periods differ in fundamental ways from those undertaken during more tranquil periods. The increase in foreign acquisitions during crises is mainly driven by non-financial acquirers targeting firms in the same industry rather than foreign financial firms. This increase in acquisition activity in a given industry is unrelated to the industry's dependence on external finance. There is also no evidence of an increase in the size of stakes bought during crises. In terms of the effect of crises on emerging-market mergers and acquisitions, we find little evidence that foreign acquisitions are resold, or "flipped", more frequently than domestic acquisitions. Moreover, flipping rates are uncorrelated with the industry's dependence on external finance. Finally, the probability of being flipped to a domestic buyer does not differ across crisis and non-crisis periods. All of these results are robust to alternative empirical specifications, different definitions of crises, and the inclusion of macroeconomic controls. Contrary to conventional wisdom, fire-sale FDI and asset flipping by foreign firms appear to have been "business as usual".

JEL-codes: F2 F41 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-ifn and nep-int
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Alquist, Ron & Mukherjee, Rahul & Tesar, Linda, 2016. "Fire-sale FDI or business as usual?," Journal of International Economics, Elsevier, vol. 98(C), pages 93-113.

Downloads: (external link)
http://www.nber.org/papers/w18837.pdf (application/pdf)

Related works:
Journal Article: Fire-sale FDI or business as usual? (2016)
Working Paper: Fire-Sale FDI or Business as Usual? (2015)
Working Paper: Fire-Sale FDI or Business as Usual? (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18837

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18837

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().