USP Electronic Research Repository

Global overview of Greenfield investment and foreign institutional investors: a critical analysis

Shukla, Gaurav (2018) Global overview of Greenfield investment and foreign institutional investors: a critical analysis. India International Journal of Juridical Sciences, 7 (2). pp. 54-73. ISSN 2278-3237

Full text not available from this repository.


Foreign Direct Investment by way of Greenfield Investments or Cross-Border Mergers is the precursor to the globalization process. The present investment climate in the world and India, in particular, is very conducive to such cash inflows into the host economy. India has immensely benefitted due to this investment trend. The authors have based this study on the assumption that developing countries are characterized by their imperfect financial markets and by prevalent market failures. As a result, the asymmetry of information between users and providers of funds is greater in emerging markets than in mature markets. Moreover, as information is more opaque and difficult to interpret from mature markets, the relative position of outsiders – and among them foreign institutional investors – is weakened. Many methods of analyzing information asymmetries between domestic and foreign investors confirm this theoretical proposition. Further propositions within the same asymmetric information framework can be derived and confronted with empirical evidence. The authors analyze the global FII investment climate of the US, Japan, EU, Singapore, Mexico, China, Taiwan & India. The results lead to a coherent picture of the impacts of FIIs on the emerging markets. The justification that advanced institutional investors do not provide direct net benefits to less developed economies is derived from their competitive advantage, i.e the collection and use of information, which cannot be fully realized. On the other hand, under the institutional circumstances of emerging economies, this typical advantage does not prevail because of large information asymmetries but turns into a disadvantage when compared with local investors. Therefore, strengths cannot be realized, but weaknesses do.

Item Type: Journal Article
Subjects: H Social Sciences > HG Finance
K Law > K Law (General)
Divisions: School of Law and Social Sciences (SoLaSS)
Depositing User: Ms Shalni Sanjana
Date Deposited: 23 Jun 2022 22:43
Last Modified: 23 Jun 2022 22:43

Actions (login required)

View Item View Item