The Theoretical and Empirical Studies of Foreign Direct Investment Choice Based on Real Option Approach

摘要

When Cross-border Mergers and Acquisitions have became the main form of FDI, however,China's FDI inflow is still Greenfield investment. Based on this phenomenon, this paper built a real option dynamic model to analyze the factors of FDI choice. We discover that uncertainty of investment environment, the additional cost and flexibility are the main reasons. The main reason of most FDI into China preferring to the greenfield investment is that the foreign direct investment concentrates in the manufacturing industry as well as the constraint of our country's legal and political environment.