@article{Alquist:293776,
      recid = {293776},
      author = {Alquist, Ron and Mukherjee, Rahul and Tesar, Linda L.},
      title = {Fire-sale FDI or business as usual?},
      address = {2016},
      number = {ARTICLE},
      abstract = {Motivated by a set of stylized facts, we develop a model  of cross-border mergers and acquisitions (M&As) to study  foreign direct investment (FDI) in emerging markets. We  compare acquisitions undertaken during financial crises –  so called fire-sale FDI –with acquisitions made during  non-crisis periods to examine whether the outcomes differ  in the ways predicted by the model. Foreign acquisitions  are driven by two sources of value creation. First,  acquisitions by a foreign firm relax the target's credit  constraint (i.e., a liquidity motive). Second, acquisitions  exploit operational synergies between the target and the  acquirer (i.e., a synergistic motive). During crises credit  conditions tighten in the target economy and the liquidity  motive dominates. The model predicts that during crisis  relative to non-crisis periods, (1) the likelihood of  foreign acquisitions is higher; (2) the proportion of  foreign acquisitions in the same industry is lower; (3) the  average size of ownership stakes is lower; and (4) the  duration of acquisitions is lower (i.e., acquisition stakes  are more likely to be flipped). We find support for (1) but  not for the other three predictions. The results thus  suggest that foreign acquisitions in emerging markets do  not differ in these important ways between crisis and  normal periods.},
      url = {http://repository.graduateinstitute.ch/record/293776},
      doi = {https://doi.org/10.1016/j.jinteco.2015.09.003},
}