Cross-border M&As vs. Greenfield Investments: Does Corruption Make a Difference?

Ayça Tekin-Koru

MPRA Paper from University Library of Munich, Germany

Abstract: This paper disentangles the effects of corruption on entry mode decision by carrying out an empirical analysis with rich, firm-level data on the activities of Swedish MNCs around the globe in manufacturing sectors from 1987 to 1998. A number of hypotheses emerge from a simple theoretical framework. The panorama of the results from the empirical part supports these hypotheses: (i) Corruption has a direct negative impact on greenfield investments and a weak positive impact on M&As. (ii). There are complex, asymmetric, secondary effects of corruption on the mode of entry. (iii). International experience dampens the effects of corruption on the choice of entry. (iv) The results are robust to differences in measures of corruption.

Keywords: Corruption; Foreign direct investment, Multinational firms; M&As, Greenfield investments (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-int
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https://mpra.ub.uni-muenchen.de/49348/1/MPRA_paper_49348.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42857

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