External Finance and the Decision of Foreign Direct Investment: Evidence from Privately-Owned-Enterprises in China
37 Pages Posted: 15 Dec 2014 Last revised: 29 Aug 2018
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: Suggested Citation