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Merger and acquisition FDI, relative wealth and relative access to bank credit: Evidence from a bivariate zero-inflated count model

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  • Ho, Woon-Yee
  • Wang, Peiming
  • Alba, Joseph D.

Abstract

We use a bivariate zero-inflated negative binomial model to examine Japanese merger and acquisition (M&A) FDI jointly with other types of Japanese FDI (or non-M&A FDI) into the United States. We find that for firms likely to engage in FDI, their rates of FDI are affected by the financial health of their main banks. However, only the rate of M&A FDI is affected by relative wealth. The rate of non-M&A FDI is affected by profitability and firm size. Our findings show the importance of distinguishing M&A FDI from non-M&A FDI and of considering the two types of FDI jointly.

Suggested Citation

  • Ho, Woon-Yee & Wang, Peiming & Alba, Joseph D., 2009. "Merger and acquisition FDI, relative wealth and relative access to bank credit: Evidence from a bivariate zero-inflated count model," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 26-30, January.
    • Handle: RePEc:eee:reveco:v:18:y:2009:i:1:p:26-30
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    References listed on IDEAS

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    1. Mara Faccio & Ronald W. Masulis, 2005. "The Choice of Payment Method in European Mergers and Acquisitions," Journal of Finance, American Finance Association, vol. 60(3), pages 1345-1388, June.
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    5. Alba, Joseph D. & Wang, Peiming, 2007. "Relative Access to Credit, Relative Wealth and FDI: Firm-Level Evidence from Japanese FDI into the United States," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 231-255.
    6. Michael W. Klein & Joe Peek & Eric S. Rosengren, 2002. "Troubled Banks, Impaired Foreign Direct Investment: The Role of Relative Access to Credit," American Economic Review, American Economic Association, vol. 92(3), pages 664-682, June.
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    Cited by:

    1. Peiming Wang & Joseph Alba & Donghyun Park, 2013. "Determinants of Different Modes of FDI: Firm-Level Evidence from Japanese FDI into the US," Open Economies Review, Springer, vol. 24(3), pages 425-446, July.
    2. Wang, Peiming & Alba, Joseph D. & Park, Donghyun, 2012. "Corporate governance and FDI: Firm-level evidence from Japanese FDI into the US," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 43-50.
    3. Vera Hofer & Johannes Leitner, 2012. "A bivariate Sarmanov regression model for count data with generalised Poisson marginals," Journal of Applied Statistics, Taylor & Francis Journals, vol. 39(12), pages 2599-2617, August.
    4. Kevin E. Staub & Rainer Winkelmann, 2013. "Consistent Estimation Of Zero‐Inflated Count Models," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 673-686, June.

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    More about this item

    Keywords

    F31 F36 G21 Merger and acquisition FDI Relative access to bank credit Relative wealth Bivariate zero-inflated negative binomial model;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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