Effects of International

Published on Jan 1, 1991
M. Levich1
Estimated H-index: 1
Dow Jones-Irwin1
Estimated H-index: 1
  • References (5)
  • Citations (16)
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This paper examines the effect of global diversification on firm value using a data set of US firms from 1994 to 2002. We document that global diversification enhances firm value. Specifically, we find that Tobin's q, our proxy for firm value, increases with foreign sales (measured as a fraction of the firm's total sales), even after we control for well-known determinants of firm value. In contrast, we find no such evidence for industrial diversification. We find evidence of both financial and r...
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The primary objective of this study is to examine the value implications of cross-border acquisitions of emerging-market multinationals (EMMs). We examine 433 mergers and acquisitions announcements associated with 58 EMMs during the sample period 1991–2004. The mergers and acquisitions announcements data come from the Thomson SDC Platinum database. We employ event study methodology to explore the impact of the announcements on the value of acquiring firms. The results show that, on average, cros...
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Scholars have noted that international investments have the potential to provide firms with real options value under uncertainty. To assess this issue, prior studies have tended to focus primarily on exchange rate volatility. Although multinational firms face other types of uncertainty as well, including those stemming from their domestic operating environment, the role of such uncertainty for firms' flexibility needs has not been previously considered. In this study we compare the influence of ...
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This study examines how regional diversification affects firm performance. The results indicate that regional diversification has linear and curvilinear effects on firm performance. Regional diversification enhances firm performance linearly up to a certain threshold, and then its impact becomes negative. The results also show that firms of developed countries maximize their performance when they operate across a moderate number of developed regions and a strictly limited number of developing re...
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This article examines the stock market performance implications of joint venture (JV) partner sell-offs using a resource-based view and an event study methodology. More specifically, it proposes hypotheses putting into evidence the stock market valuation of different reasons for JV sell-offs (refocusing of a business, debt reduction, and JV failure). Abnormal returns (ARs) from JV sell-offs are estimated for a sample of 151 European selling partners. First, the results show that stock market rea...
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Stock price responses to 170 announcements about global product design and development (GPDD) by NYSE, AMEX, and Nasdaq firms are significantly positive. This indicates that GPDD, which is fast becoming a strategic initiative of choice for multinational firms in the face of globalization and short time-to-market, is value-enhancing. The value enhancement is strong when announcing firms have a high level of information technology/systems infrastructure and a wide geographical spread of operation,...
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We examined the roles of institutional investors, boards of directors, and technological opportunity in relation to international diversification. Our research contributes to both agency and foreign direct investment theories. In data on 197 large U.S. firms, we found significant relationships between institutional ownership and international diversification. International diversification was favored by (1) professional investment funds along with outside board members and (2) pension funds alon...
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