Essays on corporate international investments

Key issues of U.S. corporate international investments in the 1990s are studied in this dissertation, which contains three essays. In the first essay, we introduce financial factors in addition to conventional strategic variables in the FDI model. The estimation results indicate that financial variables are as important as strategic factors. Corporate FDIs are influenced by financial variables such as exchange rate movement, the pattern of internal and external financing, the profile of risk and diversification, and agency behavior. Financial variables appear to have greater variability in the significance level across industries and investment destinations. The integrated model is superior to either component model in explaining FDIs for the full sample and for manufacturing industries. However, the financial framework is superior in its ability to explain the prevailing FDI phenomena.; The second essay focuses on the wealth effects of foreign M&A acquirers. It is less clear why little gains are reported for international M&As in the literature, given the added benefits of international diversification and internalization. We find significant positive announcement wealth effects for U.S. acquiring firms. The positive effects are related to the degree of international involvement and foreign profitability. The winning and losing acquiring firms are distinguished by such firm characteristics as profitability, liquidity, leverage, turnover and internal corporate governance. A link is established between these firm characteristics and wealth effects.; International investments in the financial sector have lagged significantly behind the manufacturing industry. The third essay examines patterns of international investments by U.S. firms in both industries. Estimation for FDIs in both industries indicates plausible explanations for this phenomenon. From a financial perspective, FDIs by financial firms are less sensitive to currency rate changes or financial and business risks, reflective of their superior risk management skills. Agency cost is also less important for financial firms. From an operational perspective, the lack of ownership advantages is a primary reason for the relative lagging in the financial sectors. These differences also show up in the cumulative market reactions after the international M&A announcements, which are positive but insignificant for financial firms, in contrast to positive and significant gains in manufacturing.