earticle

영어

This paper empirically analyzes the effects of foreign direct investment (FDI) on financial performance of marine transportation companies between 2005 and 2013. By using firm-level data of 407 companies in marine transportation sector during the sample period, we find that FDI companies experience severe financial difficulties with respect to companies that do not engage in FDI. Considering that marine transportation company’s FDI decision is largely affected by the foreign corporate tax rates, we estimate two-stage least squares model to find that an increase in foreign investment that is made to the foreign subsidiaries from exploiting low foreign corporate tax rates significantly worsens financial performance of parent firms over time. These results provide evidence that recent collapse of Korea’s top marine transportation companies is partially associated with prior FDI increase.