National Security and Corporate Investment

Vedran Capkun and Francesco Grazioli
Additional contact information
Vedran Capkun: HEC Paris
Francesco Grazioli: ESCP Business School

No 1486, HEC Research Papers Series from HEC Paris

Abstract: We examine whether and how the implementation of national security policies by the Committee on Foreign Investment in the United States (CFIUS) affects corporate investment. CFIUS can block a foreign takeover of a US company when its closing threatens to impair the national security of the United States. On a sample of 41,918 firm-year observations (6,192 US incorporated listed firms) over the 2008–2019 period, we find that CFIUS interventions reduce corporate investment by firms in industries of national security interest. We also document a decrease in corporate investment following the 2016 US presidential election, which increased the likelihood of CFIUS interventions. The effects are more pronounced among firms that are financially constrained and more exposed to foreign investments. Our results may be of interest to regulators who have recently adopted CFIUS-like mechanisms to protect their critical assets from foreign takeovers.

Keywords: National Security; CFIUS; Corporate Investment (search for similar items in EconPapers)
JEL-codes: D22 F38 G18 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2023-07-17
New Economics Papers: this item is included in nep-pol
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4505931 Full text (text/html)

Related works:
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:ebg:heccah:1486

DOI: 10.2139/ssrn.4505931

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().