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External Finance and the Decision of Foreign Direct Investment: Evidence from Privately-Owned-Enterprises in China

International Journal of the Economics of Business, 2015. 22 (1):23-45

37 Pages Posted: 15 Dec 2014 Last revised: 29 Aug 2018

See all articles by Jing-Lin Duanmu

Jing-Lin Duanmu

University of Surrey - Faculty of Management & Law

Date Written: December 15, 2014

Abstract

Using privately-owned-enterprises (POEs) data in China, we find that access to external finance is a statistically significant factor explaining their probability of undertaking foreign direct investment (FDI). The significance of external finance is magnified in industries featured by high external finance dependence, high technology, low tangibility, and high inventory. The external finance and FDI linkage is weaker for POEs with group affiliation, but stronger for those employing generous employment welfare practices.

Keywords: FDI decision; External finance; POEs; Group affiliation; Labor practices.

JEL Classification: D22, F21, G10, L60

Suggested Citation

Duanmu, Jing-Lin, External Finance and the Decision of Foreign Direct Investment: Evidence from Privately-Owned-Enterprises in China (December 15, 2014). International Journal of the Economics of Business, 2015. 22 (1):23-45 , Available at SSRN: https://ssrn.com/abstract=2538417

Jing-Lin Duanmu (Contact Author)

University of Surrey - Faculty of Management & Law ( email )

United Kingdom

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