According to eclectic theory of Dunning, FDI could be of four types: market seeking, resource seeking, efficiency seeking and strategic asset seeking. Market seeking factors of FDI such as market size, market growth, structure of domestic market, etc. aim at penetrating the local markets of host countries. While resource seeking investments are made in order to have access to cheap raw material, pool of labor, infrastructure, etc. New sources of competitiveness, economies of scope and specialization and low cost of production are some of the efficiency seeking factors of FDI. An attempt is made to study the impact of market seeking, efficiency seeking and resource seeking factors of host countries on FDI inflows of host countries by taking sample 10 Asian countries in the time period 1991 to 2008. Panel regression results show that all categories of FDI motivating factors have a significant impact on FDI inflows
The main aim of this article is to examine the relation between institutional ownership and stock liquidity. Using a large sample of Indian firm data for the period 2001–2012, we estimate two liquidity measures, Amihud illiquidity and HL-spread. We find that institutional ownership is negatively related to the stock liquidity. We also find that the negative institutional ownership–stock liquidity relation is mostly driven by foreign institutional investors (FIIs) and Bank ownership. Conversely, retail ownership is positively related to the stock liquidity. Importantly, we find that institutional investors are more likely to hold liquid stocks. These findings are consistent with the hypothesis that the level of institutional ownership proxies for informed investors, while they trade liquid stock to reduce price impact cost.
The "inconclusive" existing literature on long-term horizon studies of mergers is the motivation of this paper to reexamine the post-merger performance and explore the reasons of unsatisfactory performance. We test efficiency theory of mergers by examining the industry adjusted operating performance of mergers. Unlike the existing literature which examines the operating performance of mergers at end level (ROA or ROE), we not only examine the operating performance at end level but also analyze the performance at each stage of operation i.e. material, labor, overheads, tax, interest and sales. We do not find synergy creation at the end level (i.e. ROA level). However, we observe synergy creation at tax and interest level and synergy destruction at labor and overheads level. The performance of different categories of mergers which are group/non-group mergers, related/unrelated mergers and BIFR/non-BIFR mergers is also examined. Factors explaining the post-merger profitability, efficiency and cash flows are also examined.
This paper uses market-to-book ratio decomposition to examine whether firms that issue equity through initial public offerings or seasoned equity offerings exploit mispricing because of investor enthusiasm or to finance growth opportunities. We find strong evidence that, on average, firms do not issue mispriced stocks to exploit investors but, rather, to finance their investment opportunities in the form of real assets, inventory, and capital expenses. Firms that issue overvalued stocks with the view to increase their cash holdings experience poor long-run performance. Overall, our results show that stock mispricing drives equity offerings through IPOs and SEOs. Nonetheless, high transparency and balanced regulation in the marketplace deter issuing firms from investing their proceeds in non-valuecreating activities. This evidence is robust to alternative measures of valuation and long-run performance.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.