Institutional Risk Preference and Asymmetric Role of Institutional Distance: An Examination on the OFDI of China

With the implementation of “Going Out” policy and “Belt Road” initiative, Chinese outward foreign direct investment (OFDI) in countries along increased substantially past decade. This paper analyzes impact institutional distance on OFDI whether exhibits risk preferences, using data 41 for period from 2003 to 2018. We find that political economic are both positively related China’s scale, while cultural has a negative scale. also an asymmetric effect OFDI. In particular, worse host country’s environment, larger OFDI, indicating preference. On other hand, multinational enterprises more willing invest with high freedom. Culture institution environment country positive but insignificant shows characteristics proximity.