Four studies on antitrust enforcement and foreign investment activities

Zhang, Nan

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https://hdl.handle.net/2142/108258 Copy

Description

Title

Four studies on antitrust enforcement and foreign investment activities

Author(s)

Zhang, Nan

Issue Date

2020-04-22

Director of Research (if dissertation) or Advisor (if thesis)

Clougherty, Joseph A

Doctoral Committee Chair(s)

Clougherty, Joseph A

Committee Member(s)

• Mahoney, Joseph T
• Yao, Fiona Kun
• Barth, James R

Department of Study

Business Administration

Discipline

Business Administration

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Antitrust Enforcement
• Merger-policy Investigations
• Inward FDI
• Cross-Border Mergers and Acquisitions
• Greenfield FDI
• Deglobalization
• Policy-Oriented Studies
• MNE-Host Country Relations
• Business/Government Interaction and Relations

Abstract

This dissertation studies the enforcement change of antitrust policy after the global financial crisis of 2008 and the influence of antitrust enforcement on foreign-investment activities. In the years after the global financial crisis of 2008, there has been growing skepticism concerning the unmitigated benefits of globalization. In response to this skepticism, a number of barriers – particularly at the policy level – have been erected that both slow and decrease the exposure of national economies to global commerce. This dissertation research focuses on one of these barriers, the competition policy, which is the antitrust policy in the United States. Specifically, this dissertation examines: (1) the enforcement change of antitrust policy after the global financial crisis of 2008; and (2) how antitrust policy affects different foreign-investment activities. Following Chapter 1, which provides the introduction, Chapter 2 examines how antitrust enforcement has changed after the global financial crisis of 2008. I find that the strictness of antitrust has increased in the post-financial-crisis years, suggesting that antitrust policy in the contemporary cross-national context for global business has partly contributed to backlashes against globalization. Chapters 3, 4, and 5 focus on how antitrust enforcement can affect various foreign-investment activities. Chapter 3 examines how antitrust enforcement affects inward FDI at an aggregated level and finds the deterrence effect that the stricter antitrust enforcement decreases the willingness of foreigners to make further investments. Chapter 4 examines how antitrust enforcement affects foreign presence in the local merger and acquisition (M&A) markets. Motivated by the potential for antitrust and competition policies to involve protectionism, The policy risk and policy uncertainty characteristic of merger-review enforcement disproportionately affects foreign acquirers as compared to domestic acquirers, thereby disadvantaging foreign acquisitions of local firms and deterring future cross-border investment activities. Finding evidence in support of U.S. merger policy being protectionist in nature suggests that the application of competition and merger policies in other national jurisdictions – where there is less of a strong commitment to antitrust principles – might also be protectionist. Chapter 5 extends the study from previous chapters by examining whether and how antitrust enforcement – particularly merger-policy enforcement – affects cross-border non-horizontal M&As and Greenfield FDI. The finding in support of a substitute relationship between cross-border horizontal M&As and Greenfield FDI suggests that when facing the deterrence effect of merger-policy enforcement, MNEs are more likely to keep market-power incentives by shifting to Greenfield FDI instead of altering the investment purpose to internalization. Chapter 6 concludes.

Graduation Semester

2020-05

Type of Resource

Thesis

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Copyright 2020 Nan Zhang

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