The impact of exchange rate movements on mergers and acquisitions FDI

Shetty, Anand; Manley, John; Kyaw, NyoNyo A.

doi:10.1016/j.mulfin.2019.100594

Cited by 4 publications

(4 citation statements)

References 37 publications

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“…If we look at the fact of the exchange rate of Rupiah against the US dollar, in several years such as 1999, 2011 when the US dollar exchange rate strengthened, FDI also experienced a significant increase, but there were times in 2003, when the rupiah appreciated, FDI actually declined. This is consistent with research by Shetty et al [25] who argues only at a certain level, and the exchange rate can affect FDI. This is appropriate considering that in 2002 and 2006, the USD exchange rate did not experience significant appreciation.…”

Section: Analysis Of Variablessupporting

confidence: 92%

“…Referring to the provisions contained in the Investment Law No. 25,2007, Foreign Direct Investment (FDI) is an investment activity to conduct business in the territory of the Republic of Indonesia, which is carried out by foreign investors, both those that use fully foreign capital and those who join domestic investors. Foreign investment, or commonly referred to as FDI, is also an effort to increase the amount of capital for economic development sourced from abroad [9].…”

Section: Related Theory 21 Foreign Direct Investment (Fdi)mentioning

confidence: 99%

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Determinants of Foreign Direct Investment in Indonesia “Evidence from Co-Integration and Error Correction Modeling”

et al. 2020

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This study aims to examine the influence of macroeconomic indicators and infrastructure spending on foreign direct investment (FDI) in the period 1981 to 2018. This study uses a quantitative approach. The sample in this study is macroeconomic variables, which include gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending in the 1981 to 2018 period. The analysis technique used is cointegration and error correction modeling. The analysis shows that gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending have a long-term and short-term relationship to FDI.

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Section: Analysis Of Variablessupporting

confidence: 92%

Section: Related Theory 21 Foreign Direct Investment (Fdi)mentioning

confidence: 99%

Determinants of Foreign Direct Investment in Indonesia “Evidence from Co-Integration and Error Correction Modeling”

et al. 2020

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“…CMT concentrates on three factors that entice FDI to developing nations: 1) an undervalued exchange rate, which allows for lower production costs in the host country; 2) long-term investments in developing nations, the most common of which are FDI rather than stock purchases; 3) control of the hosting economy assets, which is linked to a lack of knowledge about host country securities [Kofarbai 2015]. EMPIRICAL REVIEW Shetty, Manley, and Kyaw [2019] investigated the effects of exchange rate volatility on FDI mergers and acquisitions. The analysis of abnormal returns in their study confirms no consistent relationship between real exchange rate volatility and bidder returns when looking at the relationship between cross-border mergers and acquisitions of 591 US firms from 2001 to 2010.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

The Nexus Between Foreign Direct Investment and Nominal Exchange Rate, Real Gdp, and Capital Stock in Tanzania

Utouh,

Tile

2023

aspe

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Aim: The paper aims to examine the relationship between FDI and the nominal exchange rate, real GDP, and capital stock in Tanzania using quantitative research methods and an econometric analysis. The analysis aims to provide insights into the factors that affect FDI and contribute to the existing literature on the relationship between FDI and economic growth. Methods: This study examines the relationship between FDI inflow, real GDP, capital stock, and the normal exchange rate in Tanzania using a robust research methodology. The study employs STATA 15 software and Akaike’s Information Criteria (AIC), Schwarz Information Criteria (SC), Final Prediction Error (FPE), and the Hannan Quinn (HQ) Information Criteria. In addition, the autoregressive model, the Johansen co-integration test, and the Toda-Yamamoto Granger causality (modified WALD) test were employed to determine the optimal lag. Results: The results indicate a bidirectional relationship between the nominal exchange rate and FDI in Tanzania, with FDI inflows influencing the nominal exchange rate volatility and vice versa. Furthermore, the results indicate that real GDP, capital stock, and the nominal exchange rate exert a unidirectional influence on FDI influx in Tanzania. Conclusions: The nominal exchange rate and capital stock have positive and negative correlations with foreign direct investment. Like many other African economies, Tanzania remains vulnerable to external forces despite making significant strides in stabilizing the exchange rate. It is recommended that the Central Bank of Tanzania – along with those of other African nations with similar economic structures – maintain a stable nominal exchange rate level as an incentive for foreign investors in order to increase the inflow of foreign direct investment.

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“…Natural resources (NR) This control variable was measured by the percentage of coal, oil, metal, and minerals in the total exports of all products in each country [20]. The abundance of natural resources is a location advantage of the host country.…”

Section: Variable Selectionmentioning

confidence: 99%

Empirical Analysis on the Influence of Business Environment on Foreign Direct Investment Inflow Based on the Panel Data on 26 Countries

Jiang¹,

Zhen-dong²,

Sun³

2020

IJSDP

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With the intensification of global competition and development of investment theories, foreign direct investment (FDI) is no longer solely affected by economic factors. Many noneconomic factors, such as policies and institution, now play an important role in FDI inflow. As a composite indicator, business environment has attracted a growing attention from investors. From theoretical and empirical perspectives, this paper quantifies and qualifies the influence of business environment over the FDI under different conditions. The impact mechanism of business environment on the FDI was refined by decomposing business environment into multiple subfactors, and considering various factors of different economies, such as natural resources (NR), technological resources (TR), and political stability (PS). An empirical analysis was conducted on the panel data of 26 countries in 2005-2018. The results show that: the host country can attract more FDI inflow by improving business environment, NR, TR, and PS; excessively high NR and TR, to a certain extent, suppress the promotion effect of business environment on FDI; four subfactors of business environment, namely, the protection of small and medium investor (PI), cross-border trade (CT), electricity supply (ES), and insolvency (IN), have relatively high promotion effects on FDI inflow. The research results enrich the theories on FDI and business environment, and provide a reference for the design of innovative polices.

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The impact of exchange rate movements on mergers and acquisitions FDI

Cited by 4 publications

References 37 publications

Determinants of Foreign Direct Investment in Indonesia “Evidence from Co-Integration and Error Correction Modeling”

Determinants of Foreign Direct Investment in Indonesia “Evidence from Co-Integration and Error Correction Modeling”

The Nexus Between Foreign Direct Investment and Nominal Exchange Rate, Real Gdp, and Capital Stock in Tanzania

Empirical Analysis on the Influence of Business Environment on Foreign Direct Investment Inflow Based on the Panel Data on 26 Countries

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