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UK direct investment in the United States: a mode of entry analysis

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  • Peter Nisbet
  • Wayne Thomas
  • Stuart Barrett

Abstract

This article investigates the reasons underlying the high propensity of UK firms to directly invest in the United States via acquisition and merger. Using a binomial logit model, this study analyses data from 142 firms in five industrial sectors over the period 1984-1994. Together, these sectors account for more than 80% of UK foreign direct investment (FDI) in the sample period. The results highlight the role of diversification in explaining this behaviour. In contrast, the relative lack of evidence to support the role of exchange rates and leverage in influencing the decision to merge/acquire continues to fuel division as to the role of capital market imperfections in determining mode of entry.

Suggested Citation

  • Peter Nisbet & Wayne Thomas & Stuart Barrett, 2003. "UK direct investment in the United States: a mode of entry analysis," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 10(3), pages 245-259.
    • Handle: RePEc:taf:ijecbs:v:10:y:2003:i:3:p:245-259
    DOI: 10.1080/1357151032000126229
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    Cited by:

    1. Yusnidah Ibrahim & Jimoh Olajide Raji, 2018. "Cross-border merger and acquisition activities in Asia: the role of macroeconomic factors," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 35(2), pages 307-329, May.
    2. Uddin, Moshfique & Boateng, Agyenim, 2011. "Explaining the trends in the UK cross-border mergers & acquisitions: An analysis of macro-economic factors," International Business Review, Elsevier, vol. 20(5), pages 547-556, October.
    3. Saliola, Federica & Zanfei, Antonello, 2009. "Multinational firms, global value chains and the organization of knowledge transfer," Research Policy, Elsevier, vol. 38(2), pages 369-381, March.
    4. Onur Koska, 2009. "Foreign Direct Investment For Sale," Working Papers 0910, University of Otago, Department of Economics, revised Oct 2009.
    5. Boateng, Agyenim & Hua, Xiuping & Uddin, Moshfique & Du, Min, 2014. "Home country macroeconomic factors on outward cross-border mergers and acquisitions: Evidence from the UK," Research in International Business and Finance, Elsevier, vol. 30(C), pages 202-216.

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    Keywords

    Foreign Direct Investment; Mode of Entry;

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