Work in Progress/ Supplemental Material

Papers listed here are a mix of working papers and research in progress. Descriptions of the papers are often, but not always, the paper's abstract. Check out my IDEAS or ORCID page for more information. There are more research in progress than shown on this list, its just that they are not far enough along yet to talk about.

Institutional Quality, the Level of Development and Japanese Outward Foreign Direct Investment (w. Andrzej Cieślik)

Japan regained its status as the world’s largest source of outward FDI in 2018. This paper studies the determinants of Japanese direct investment both worldwide and in different country groups. Our research hypotheses are derived from the Knowledge-Capital Model and tested empirically using a negative binomial model and statistical data for 179 host countries for the period 1995-2019. In particular, we focus on the role of how a host’s institutional quality affects the cost of foreign direct investment. We show that institutional quality matters for attracting Japanese FDI both for developed and developing and transitioning economies. We find the effect of institutional quality to be more pronounced in the latter group of countries.

Partial ownership, financial constraint, and FDI (w. Tadashi Ito and Ayumu Tanaka)

Using matched firm-bank-FDI data, we explore the possibility that firms with stricter financial constraints tend to choose joint ventures with a lower ownership ratio for their foreign subsidiaries. In addition, we test the hypothesis that parent firms with banks as their largest shareholders have a lower stake in their foreign subsidiaries because banks are risk averse. Our empirical analysis confirms foreign subsidiary ownership ratios are indeed negatively associated with parent firm debt ratios. We also find that the greater degree to which the parent firm has bank shareholders, the lower the parent’s ownership share in its subsidiaries. However, this tendency is weakened when the bank has an overseas subsidiary in the host country, presumably because the information asymmetry is mitigated.