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Effects of International

Published on Jan 1, 1991
M. Levich1
Estimated H-index: 1
,
Dow Jones-Irwin1
Estimated H-index: 1
Abstract
  • References (5)
  • Citations (16)
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References5
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#1Kenneth R. French (U of C: University of Chicago)H-Index: 46
#2James M. Poterba (MIT: Massachusetts Institute of Technology)H-Index: 84
The difference between reported price-earnings ratios in the United States and Japan is not as puzzling as it appears at first glance. Nearly half the disparity is caused by differences in accounting practices with respect to consolidation of earnings from subsidiaries and depreciation of fixed assets. If Japanese firms used U.S. accounting rules, we estimate that the P/E ratio for the Tokyo Stock Exchange would have been 32.1, not the reported 54.3, at the end of 1988. Accounting differences ar...
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#1William H. Branson (NBER: National Bureau of Economic Research)H-Index: 9
#2Dwight M. Jaffee (NBER: National Bureau of Economic Research)H-Index: 26
This paper provides a framework for analyzing the effects of symmetric and asymmetric changes in information about risk on equilibrium real interest rate spreads across countries. Following the literature on parameter uncertainty, improvements in information are modeled as reductions in estimated variances. The equilibrium interest differential is determined in a two country setting. The effects of changes in information on the differential are shown in cases where (a) all investors have the sam...
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This paper derives a closed-form valuation model in a two-country world in which the domestic investors are constrained to own at most a fraction, δ, of the number of shares outstanding of the foreign firms. When the “δ constraint” is binding, two different prices rule in the foreign securities market, reflecting the premium offered by the domestic investors over the price under no constraints and the discount demanded by the foreign investors. The premium is shown to be a multiple of the discou...
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In this paper, I provide some evidence concerning the relationship between financial information and a firm's entry into a capital market. The main assumption underlying this study is that corporations will be motivated to upgrade their financial disclosure in order to obtain scarce money capital as cheaply as possible.' To assess the relationship between disclosure and capital market entry, I selected the entry of an enterprise-investor into an international new issues market. My reason for thi...
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Cited By16
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#1Amar Gande (SMU: Southern Methodist University)H-Index: 12
#2Christoph Schenzler (Vandy: Vanderbilt University)H-Index: 6
Last. Lemma W. Senbet (UMD: University of Maryland, College Park)H-Index: 32
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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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#1Bülent Aybar (Southern New Hampshire University)H-Index: 2
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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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#1Seung Hyun Lee (UTD: University of Texas at Dallas)H-Index: 22
#2Mona V Makhija (Max M. Fisher College of Business)H-Index: 11
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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#1Protiti Dastidar (GW: George Washington University)H-Index: 1
This paper presents new evidence on US multinational firms and shows that the decision to diversify internationally is endogenous, and depends on firm, industry, and home-country characteristics. US multinational firms are a self-selected sample, and firms that are more likely to diversify internationally have lower firm values. Contrary to the global diversification discount literature, multinational firms are valued at a premium after controlling for the endogeneity of the global diversificati...
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#1Gongming Qian (CUHK: The Chinese University of Hong Kong)H-Index: 17
#2Lee Li (York University)H-Index: 13
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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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#1Soyeon Jung (UNLV: University of Nevada, Las Vegas)H-Index: 1
#1Pierre-Xavier Meschi (Euromed Management – School of Management and Business)H-Index: 16
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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The large literature on labor‐market rent sharing consists of closed economy analyses. In this article we examine whether profits are shared across borders and also conditioned by international linkages that help shape economic openness. In a sample of 1,014 Canadian manufacturing union contracts from 1980 through 1992, we find that U.S. industry profitability affects Canadian wage outcomes and that the pattern of rent sharing varies significantly across international linkages, including multina...
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#1Kalu Ojah (United Arab Emirates University)H-Index: 15
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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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#1Laszlo Tihanyi (OU: University of Oklahoma)H-Index: 32
#2Richard A. Johnson (MU: University of Missouri)H-Index: 24
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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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