This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such...

In this paper an index of financial competitiveness is calculated that corresponds to the market-to-book ratio of inward FDI stocks. For a panel of five advanced economies from 1980 to 2006 it is shown that price competitiveness, stable inflation rates and registered patents have a positive...

This paper provides new evidence on the foreign direct investment stocks of German firms. We use firm-level data for the years 1990-2000 to describe the regional and sectoral patterns of German FDI through gravity-type equations. We provide evidence on the patterns of FDI by sector, by size of...

Multinational corporations (MNC) search increasingly for lead market knowledge and technological expertise around the globe. We investigate whether their subsidiaries gain access to these valuable sources of host country knowledge to the same degree as domestic rivals. We develop a theoretical...

This paper investigates the role of corporate taxation with respect to a multinational's investment decision, in which the multinational can pursue either a direct or an indirect investment strategy. The latter involves at least three corporate entities and opens up enhanced opportunities for...

Wholesale and retail trade affiliates owned by parent firms in manufacturing account for a considerable fraction of overall affiliate sales. Although quantitatively important, this Export-Supporting FDI (ESFDI) activity has received little attention in the literature. This paper includes ESFDI...

This paper analyzes the tax haven investment behavior of multinational firms from a country that exempts foreign income from taxation. High foreign tax rates generally encourage firms to invest in tax havens, though significant costs of reallocating taxable income dampen these incentives. The...

Many empirical studies in the area of foreign direct investment (FDI) exclusively focus on flows between industrialized countries. This article makes a contribution to the still relatively sparse literature on FDI in emerging markets by estimating determinants of German FDI flows to Latin...

This study investigates the determinants of adjustments in the provision of cross-border loans by internationally active banks. For the period from 2002 to 2010, we look at quarterly transaction data (excluding valuation effects) on long-term loans issued by the largest 69 German banking groups...

The German Commercial Code ("HGB") allows banks to build visible reserves for general banking risks according to section 340g HGB. These "GBR reserves" may, in addition to their risk provisioning function, be used to enhance capital endowment, for internal financing, signaling or earnings...