Firm-Level Determinants of Foreign Investment and M&A Activity: Evidence from Turkey

Firm-Level Determinants of Foreign Investment and M&A Activity: Evidence from Turkey

Mine Uğurlu (Boğaziçi University, Turkey)
DOI: 10.4018/978-1-7998-2448-0.ch074
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Abstract

The last decade is marked with acceleration of mergers, corporate restructuring and governance activities. M&A activity has been driven by factors such as technological change, globalization, free trade, deregulation, attempts to attain economies of scale, rise in entrepreneurship, and economic growth. Corporations need to adjust to the change in the environment and expand their markets to achieve growth and protection against volatile economic conditions. Firms can achieve international expansion through foreign direct investments (FDIs) which can take the form of cross-border acquisitions (brownfield investments) and Greenfield investments. This chapter covers an overview of the literature on the determinants of FDI forms of entry, and M&A activity followed with an empirical investigation of the firm-level determinants of foreign investment in Turkey with emphasis on cross-border acquisitions and Greenfield investments. Summary of the findings is followed with the economic implications of forms of FDI entry. The concluding remarks cover the implications of the results for policy makers.
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Theoretical Background

The studies on determinants of mergers and acquisitions can be grouped as those that focus on country-level drivers of M&A activity and firm-level analyses. After an overview of the literature on the country-level drivers of M&A activity, the theoretical background covers evidence on firm-level determinants of M&A activity with an emphasis on cross-border mergers and Greenfield investments.

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