Are Intra-Industry Investment Patterns Consistent with Cost Disadvantages to Cross-Border Investing? Evidence from the U.S. Chemical Industry

Abstract

This paper tests whether the pattern of related and unrelated acquisitions is consistent with the existence of cost disadvantages to cross-border investing. Data from the U.S. chemical industry (1978–89) are consistent with the implications that foreign investors are more likely than domestic investors to make closely related acquisitions. The data also indicate that U.S. FTC antitrust policy affected the pattern of domestic acquisitions.