DP2347 Determinants of Ownership Structure: A Comparative Analysis of Multinational Firms' Preferences in Greece and Portugal

Author(s): Natália M C Barbosa , Eleni Louri-Dendrinou

Publication Date: January 2000

Keyword(s): Multinationals , Ownership Structure

JEL(s): F23 , L22

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP2347.asp

The aim of the paper is to examine the determinants of the ownership choice (full, majority, minority) of manufacturing MNFs established in Greece and Portugal in the 1990s. FDI observations in the two countries underline differences between them in terms of relative FDI size and industry as well as ownership preferences. Transaction cost arguments together with bargaining power considerations provide the theoretical basis for the econometric model which uses multinomial logit analysis applied on 363 and 469 MNFs in Greece and Portugal. The estimations contribute to a better understanding of such differences, showing that location and industry characteristics through their effect on risk-adjusted expected profits influence ownership decisions.