Foreign takeovers are not hollowing out corporate Canada, according to a Conference Board of Canada report released today.

Booming corporate profitability and low U.S. and Canadian interest rates are the real reasons for the recent spate of high-profile mergers and acquisitions, says the study.

“Recent mega-deals are exceptions to the long-term investment trend in M&A activity in Canada,” said Louis Thériault, director, international trade and investment centre, in a release. “Based on the aggregate data over the past 15 years, it is difficult to conclude that Canada is being ‘hollowed out.’”

“The current debate about foreign acquisitions needs to be shifted to developing policies that could increase foreign direct investment in Canada, as well as promoting globally competitive Canadian companies,” he added.

The report is called “Trends in Foreign Direct Investment and Mergers and Acquisitions: International and Canadian Performance and Implications.”

In fact, the report notes that during the past 15 years, Canadian companies have bought more than they’ve been bought, by foreign companies.

For example, between 1994 and 2007 the total number of $1 billion-plus deals for both inward and outward M&As was virtually identical. But for transactions of less than $1 billion, Canadians purchased foreign assets in higher numbers than foreign firms picked up Canadian companies. The total value of deals was shared almost equally.

With U.S. profitability expected to weaken, M&A activity between Canada and the United States could slow down in the next two years, said the Board. Also for each percentage-point decrease in long-term Canadian interest rates, outward foreign direct investment (FDI) by Canadian firms increased by 1.3%. For each percentage-point decrease in long-term U.S. interest rates, FDI in Canada grew by 0.8%.