TY  - JOUR
A1  - Bialek, Sylwia
A1  - Weichenrieder, Alfons J.
T1  - Do stringent environmental policies deter FDI? M&A versus Greenfield
T2  - Environmental and resource economics
N2  - Strict environmental regulation may deter foreign direct investment (FDI). The paper develops the hypothesis that regulation predominantly discourages FDI that is conducted as Greenfield investment rather than mergers and acquisitions (M&A). The hypothesis is tested with German firm-level FDI data. Empirically, stricter regulation reduces new Greenfield projects in polluting industries, but indeed has a much smaller impact on the number of M&As. This significant difference is compatible with the fact that existing operations often benefit from grandfathering rules, which provide softer regulation for pre-exisiting plants, and with the expectation that for M&As part of the regulation is capitalized in the purchase price. The heterogeneous effects help explaining mixed results in previous studies that have neglected the mode of entry.
KW  - Environmental stringency
KW  - Entry mode
KW  - Pollution haven hypothesis
KW  - Foreign direct investment
Y1  - 2021
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/63558
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-635587
SN  - 1573-1502
N1  - Open Access funding enabled and organized by Projekt DEAL.
VL  - 80
SP  - 603
EP  - 636
PB  - Springer Science + Business Media B.V.
CY  - Dordrecht [u.a.]
ER  -