The Impact of Foreign Investors’ Challenges to Domestic Regulations
研究了外国投资者通过投资者-国家争端解决机制挑战东道国法规如何影响监管政策制定和外商直接投资价值，发现该机制会阻止降低现有投资盈利能力的国内监管干预。
We examine how foreign investors’ ability to challenge allegedly harmful host-country regulations before an international arbitral tribunal through investor-state dispute settlement (ISDS) affects regulatory policymaking and the value of foreign direct investment. Consistent with ISDS deterring costly host-country regulations, following an ISDS challenge of an industry-level regulation, the equity values of firms in the affected industry increase significantly. Domestic firms without ready access to ISDS also experience higher equity values, suggesting that our results are not driven by expectations of future damage awards. The results are concentrated in developed countries, where stronger legal institutions likely bind governments to their previous commitments to foreign investors. Additionally, capital expenditures by foreign firms in the host country fall before a case is filed and then increase significantly afterward. Taken together, our evidence suggests that ISDS deters domestic regulatory interventions that decrease the profitability of existing foreign direct investments in the host country.