A Study On The Different Influence Of Exchange Rate Volatility On Chinese Enterprises’ Outward Direct Investment Modes

International direct investment theory has always been the focus of international financial research and analysis,providing a good indication for corporate investment decisions.In recent years,the level of foreign direct investment of Chinese enterprises has been continuously improved,and the investment amount in 2020 ranks first in the world.In the context of the gradual realization of two-way fluctuations in the RMB exchange rate,it is of great significance to study the impact of exchange rate volatility on the foreign direct investment methods of Chinese enterprises.Using the Global China Greenfield Investment Tracking Database and Zephyr Global M&A Transaction Analysis Database,this paper organizes and summarizes the OFDI data of a single enterprise in the current year into national-level investment data of China to various countries,and shows the panal data of 132 countries from 2010 to 2019.Then,by constructing LOGIT model and other models,it studies the differential impact of RMB exchange rate volatility on greenfield investment and cross-border mergers and acquisitions of Chinese enterprises.It found that when the volatility of the RMB exchange rate increases,on the one hand,Chinese enterprises will increase greenfield investment decisions,increase the frequency of greenfield investment and expand investment scale,but on the other hand,cross-border mergers and acquisitions will decrease,and the number and scale of mergers and acquisitions will also follow.The results of this paper are still robust after a series of regressions such as replacing explanatory variables,replacing sample size,and adding control variables.In addition,this paper also conducts a heterogeneity test and finds that before the exchange rate reform in 2015,the impact of exchange rate volatility on the probability and scale of greenfield investment and cross-border mergers and acquisitions was very significant,but the degree of impact was significantly reduced after the exchange rate reform.For countries that import more from China,the volatility of RMB exchange rate will promote Chinese greenfield investment abroad and inhibit cross-border mergers and acquisitions,but this differential effect is not significant for countries that import less from China.For low and middle income countries,exchange rate volatility significantly promote the greenfield investment and inhibit cross-border mergers and acquisitions of Chinese enterprises,but the impact on middle and high income countries is not obvious.Based on the empirical conclusions,this paper puts forward policy suggestions such as strengthening the foreign exchange risk management of enterprises and improving the international influence of the RMB.