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Institutt for økonomi
Seminar

Faculty seminar with Vera Eichenauer

Welcome to seminar with Vera Eichenauer

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Vera Eichenauer CV 

Title: Mild Deglobalization: The Effects of Screening Foreign Investments on Participations and Acquisitions

Abstract:

Openness to foreign investments is associated with risks. To mitigate these risks, many high-income countries strengthened the screening of foreign inward investments over the last decade. Governments consider more and new sectors critical for national security. Foreign investments in these sectors require government approval. By increasing transaction costs and uncertainty, investment screening distorts the market for participations and acquisitions (P&A). We examine the economic effects of investment screening by combining deal-level data on P&A for the period 2007-2022 with information on sectoral investment controls in 42 OECD and EU countries. We expect a reduction in the number of deals in screened sectors. We find that investment screening reduces the number of cross-border P&A in the screened sectors by 11 to 17 percent. In line with our expectations, the effect size varies by deal volume, source country, and firm size. In ongoing work, we use alternative weighting methods for our staggered triple difference-in-differences design and study how investment screening affects domestic P&A.