Greenfield, merger and acquisition, or export? Regulating the entry of multinational enterprises to a host-country market

Cai, Dapeng; Karasawa-Ohtashiro, Yukio

doi:10.1016/j.iref.2017.11.008

Cited by 6 publications

(8 citation statements)

References 34 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…There is an extensive body of literature on mixed oligopolies (for an excellent survey of earlier work, see De Fraja and Delbono, 1990). For a survey of the literature of mixed oligopoly with foreign competitors, see Cai and Karasawa-Ohtashiro (2015).…”

Section: Literature Reviewmentioning

confidence: 99%

“…99 For example, Qiu and Wang (2011) consider a host government's FDI policy for a host market consisting of n profit‐maximizing private firms. Cai and Karasawa‐Ohtashiro (2018) demonstrate that it is optimal for a host government to not engage in greenfield investment, but to instead choose mergers and acquisitions when the host market is sufficiently small. …”

mentioning

confidence: 99%

See 1 more Smart Citation

Why Do Mandated International Joint Ventures Still Exist?

Cai

Karasawa-Ohtashiro

2020

Contemporary Economic Policy

Self Cite

View full text Add to dashboard Cite

It is widely believed that restrictions against foreign direct investment (FDI) should be eliminated altogether. However, local equity requirements (LERs) that effectively mandate multinational enterprises (MNEs) to enter through international joint ventures (IJVs) are still common and are seemingly persistent. We seek to understand why and how governments are motivated to adopt LERs. We demonstrate that LERs can in fact be host governments' optimal choices when regulating the entry of MNEs into domestic markets formerly dominated by public firms. (JEL F13, F23, L32) * We wish to thank Tsung-Sheng Tsai, Povilas Lastauskas, session participants at the 94th Annual Conference of the Western Economic Association International and the 2019 Taiwan Economic Association Annual Conference, two anonymous reviewers, and Kwok Ping Tsang (Co-Editor), for their valuable comments. We acknowledge financial support from the JSPS KAKENHI (17K03731, 20K01644, 20K01666), Nanzan University for the Pache Research Subsidy I-A-2 for the 2020 academic year, and Daiko Foundation (No. 11075). An early version of this paper was circulated under a different title "FDI Policy and Mixed International Joint Ventures." The usual disclaimers apply. [Correction added on 4 August 2020 after first online publication: Changes have been made to the following: (1) the first sentence of the Acknowledgment section has been deleted; and (2) the last sentence of Acknowledgement section has been extracted and captured as footnote 12 which resulted to renumbering of footnote and its corresponding citations throughout the article.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

mentioning

confidence: 99%

Why Do Mandated International Joint Ventures Still Exist?

Cai

Karasawa-Ohtashiro

2020

Contemporary Economic Policy

Self Cite

View full text Add to dashboard Cite

show abstract

“…Previous overseas investment research concentrated on two (Hennart & Reddy, 1997; Yiu & Makino, 2002) and, more rarely, three (Cai & Karasawa‐Ohtashiro, 2018; Meyer et al, 2009) possible strategies. Various combinations of those strategies have been used.…”

Section: Introductionmentioning

confidence: 99%

“…Yiu & Makino, (2002) considered the selection between wholly owned subsidiaries and JVs in their analysis. (Cai & Karasawa‐Ohtashiro, 2018) studied the choice between greenfield investment, M&A, and export, while (Meyer et al, 2009) analyzed the influence of institutional factors on the choices between acquisitions, JVs, and greenfield investments. However, limiting the focus to foreign direct investment (FDI) and export strategies have constrained our understanding of foreign investment actions to only those presumably followed by the start of business operations.…”

Section: Introductionmentioning

confidence: 99%

“…These investments are different in nature, strategic goals, and risk, as well as the level of control and involvement of an investor (Roberts & Berry, 1984). Moreover, each of the aforementioned investments depends on how market conditions react differently to host environments (Becker & Fuest, 2010; Cai & Karasawa‐Ohtashiro, 2018; Groh, von Liechtenstein, & Lieser, 2010).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

A merry host makes bolder guests: An analysis of cross‐border investment choices of Chinese firms

Соловьева

Yamini

Wei

2020

Thunderbird Intl Bus Rev

View full text Add to dashboard Cite

This article explores the influence of a host country's conditions on foreign equity investment decisions made by China‐based firms using the assumptions of the institutional theory and transaction cost approach. We use multinomial logit regression to analyze a sample of 1,018 cross‐border investments by Chinese firms categorized into majority acquisitions, minority acquisitions, joint ventures (JVs), and venture capital. According to our findings, Chinese investors prefer to conduct foreign direct investment in the same industry. This, in turn, highlights their desire to gain market influence and learn or obtain strategic knowledge and resources. Furthermore, taxation is proved to encourage the establishment of foreign JVs. The interaction between the host country's tax levels and majority acquisitions in the same industry reveals the concern of Chinese investors with after‐tax returns and influence in the new market.

show abstract

Attractive target for tax avoidance: trade liberalization and entry mode

Okoshi

2024

Int Tax Public Finance

View full text Add to dashboard Cite

Growing foreign direct investments (FDIs) have been observed in parallel to the development of tax avoidance by multinational enterprises; however, empirical evidence indicates the asymmetric effects of trade costs on a firm’s entry decision. To give a new rationale and insights into the impacts of transfer pricing and trade liberalization on a firm’s global activities, this study incorporates transfer pricing and investigates a foreign firm’s entry decision: exports, greenfield FDI (GFDI), or cross-border mergers and acquisitions (CM&As). We show that CM&A is the equilibrium entry mode when transfer pricing regulation is loose, whereas the choice between exports and GFDI depends on the fixed costs of GFDI. Moreover, trade liberalization increases the likelihood of CM&A but decreases that of exports because a reduction in trade costs enhances tax-avoidance efficiency due to more intrafirm trade, implying that tax avoidance in the form of CM&A becomes crucial as globalization progresses. Our welfare analysis shows that regulating CM&A based on consumers’ benefits may result in welfare reduction because profit shifting is most effective under CM&A and a host country’s tax revenue from the foreign firm increases. The results imply the importance of considering the link between international tax and antitrust policies.

show abstract

Greenfield, merger and acquisition, or export? Regulating the entry of multinational enterprises to a host-country market

Cited by 6 publications

References 34 publications

Why Do Mandated International Joint Ventures Still Exist?

Why Do Mandated International Joint Ventures Still Exist?

A merry host makes bolder guests: An analysis of cross‐border investment choices of Chinese firms

Attractive target for tax avoidance: trade liberalization and entry mode

Contact Info

Product

Resources

About