Acta Universitatis Danubius. Œconomica, Vol 12, No 6 (2016)

Firm Characteristics and Their Effects on Foreign Direct Investment Evidence from Romania, Republic of Moldova and Republic of Turkey

Doina Prodan Palade


Abstract: The purpose of this paper is to examine whether the fir accounting and financial performance ratios are reflected in the level of the Foreign Direct Investment and which one plays the most important role in attracting the foreign investors. Prior work: the paper investigates the prior research works on this topic, underlining the influence of different factors on the level of Foreign Direct Investment. Approach: The sample is made of 25 randomly extracted firms listed on Bucharest Stock Exchange, for the fiscal year 2014. We constructed and tested a multiple linear regression model, having the level of Foreign Direct Investment as the dependent variable and 22 financial ratios, as independent variables. Results: the authors found a positive effect of the financial ratios such as the net turnover to networking capital, equity multiplier, and net profitability ratio on the level of Foreign Direct Investment. Implications: the results of the research show that to enhance Foreign Direct Investment, corporations must improve their accounting and financial performance. Value: the originality of this study results from the fact that it takes into consideration three different economic environments: Romania, Turkey and Moldova, a European Union member country, a candidate to the European Union and a non- European Union country.


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