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Mergers and Acquisitions and Greenfield Foreign Direct Investment in Selected ASEAN Countries

Author

Listed:
  • Tavakol Moghadam, Alireza

    (Universiti Putra Malaysia, Malaysia)

  • Syazwani Mazlan, Nur

    (Universiti Putra Malaysia, Malaysia)

  • Chin, Lee

    (Universiti Putra Malaysia, Malaysia)

  • Ibrahim, Saifuzzaman

    (Universiti Putra Malaysia, Malaysia)

Abstract

Multinational enterprises undertake Foreign Direct Investments mainly through two different modes: Mergers and Acquisitions and greenfield investments. In the sizable empirical literature that examines the determinants of Foreign Direct Investments, very few studies investigated the determinants of these modes. This article empirically analyzes the extent to which determinants such as market size, exchange rate, and market openness in six selected ASEAN countries (ASEAN-6) influence the choice of one entry mode of Foreign Direct Investments over the other. A robust relationship between market size and exchange rate with greenfield inflows rather than Mergers and Acquisitions sales is found. Additionally, given an increase in market openness, foreign firms prefer Mergers and Acquisitions to greenfield investments. The results also confirm the fire-sale Foreign Direct Investments phenomenon during financial crises.

Suggested Citation

  • Tavakol Moghadam, Alireza & Syazwani Mazlan, Nur & Chin, Lee & Ibrahim, Saifuzzaman, 2019. "Mergers and Acquisitions and Greenfield Foreign Direct Investment in Selected ASEAN Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 34(4), pages 746-765.
    • Handle: RePEc:ris:integr:0787
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    Citations

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    Cited by:

    1. Polyxeni Kechagia & Theodore Metaxas, 2022. "FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation," Economies, MDPI, vol. 10(4), pages 1-23, March.
    2. Farrukh Nawaz Kayani & Ismat Nasim & Khalil Abu Saleem, 2024. "Analyzing the Impact of Governance, Environment and Trade on Inward FDI: A Case of Cambodia, Thailand and Vietnam from ASEAN," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 523-534, March.
    3. Amendolagine, Vito & Crescenzi, Riccardo & Rabellotti, Roberta, 2022. "The geography of acquisitions and greenfield investments: firm heterogeneity and regional institutional conditions," LSE Research Online Documents on Economics 115597, London School of Economics and Political Science, LSE Library.
    4. Xiaoyu Jiang & Yangfen Chen, 2020. "The Potential of Absorbing Foreign Agricultural Investment to Improve Food Security in Developing Countries," Sustainability, MDPI, vol. 12(6), pages 1-19, March.

    More about this item

    Keywords

    Mergers and acquisitions; Greenfield investment; Foreign direct investment; ASEAN;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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