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What Makes Firms in Emerging Markets Attractive to Foreign Investors? Micro-evidence from the Czech Republic

Peter Tóth () and Petr Zemcik ()

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: We use a panel of Czech firms to enhance existing literature where the dependent variable is foreign ownership. In our estimation, we control for endogeneity and unobserved effects using standard methods complemented by tests for heterogenous Granger-causality. We also model foreign ownership as a response variable in a hazard model and consider sorting by foreign owners rather then by domestic firms. We find that foreigners target firms with a greater ownership concentration in industries’s with higher level of risk, in countries with lower labor costs and corporate income taxes.

Keywords: foreign ownership; endogeneity; causality; fixed effects; hazard model; truncated sample (search for similar items in EconPapers)
JEL-codes: C23 C24 C25 F21 G3 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-fin and nep-tra
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