Do Financing Constraints Matter for Outward Foreign Direct Investment Decisions? Evidence from India

Subash  Sasidharan; Padmaja  M

Do Financing Constraints Matter for Outward Foreign Direct Investment Decisions? Evidence from India

Subash Sasidharan, Padmaja M

Indian Institute of Technology, Madras

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Abstract

This study examines the role of financing constraints in explaining outward
FDI decisions using unique firm level panel data on Indian manufacturing
during the period 2007–2014. We consider the role of both internal finance
and external finance in firm decisions on outward FDI and employ instrumental variable probit model to examine financing constraints in outward FDI decisions of firms. Further, using count data models, we examine financing constraints in determining strategies regarding number of affiliates abroad. The study shows that firms with higher cash flow and liquidity are likely to have more number of foreign affiliates

Original language	English
Place of Publication	Frederiksberg
Publisher	Asia Research Centre. Copenhagen Business School
Number of pages	37
Publication status	Published - 2016
Externally published	Yes

Series	Copenhagen Discussion Papers
Number	61
ISSN	0904-8626

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