The Valuation Effects of Multinational Firms
Author | : Jason Sturgess |
Publisher | : |
Total Pages | : 60 |
Release | : 2012 |
ISBN-10 | : OCLC:1290239529 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book The Valuation Effects of Multinational Firms written by Jason Sturgess and published by . This book was released on 2012 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a unique sample of 212 UK multinational firms and 4,676 subsidiaries, I show that multinational firms attract, on average, a global diversification premium of approximately 16% compared with a country-industry matched portfolio of local non-multinational firms. I also show that the value premium is higher when the difference between UK and host country internal corporate governance is greater - on average better corporate governance practices explain roughly one-third of the value premium. This result suggests that multinational firms are compensated for exporting good corporate governance. Further, I find evidence that advocates multinational firms invest more in countries with weaker governance standards. At the subsidiary level, I find that multinational firms use internal capital markets to channel higher levels of investment into better investment opportunities. Finally, consistent with a value premium, I show that multinational firms channel investment into globally cheap assets.