Why Investors Value Multinationality

Authors

  • Randall Merck University of Alberta
  • Bernard Yeung University of Michigan

DOI:

https://doi.org/10.1016/1057-0810(91)90048-4

Abstract

We examine the value of multinationality to investors as reflected in firms’ q ratios. The positive impact of research and development and advertising spending on a firm’s q is enhanced by multinationality, but multinationality itself has no significant impact. This supports the internalization theory’s prediction that intan- gible assets are necessary to justify direct foreign investment and, thus, a recent strand of trade literature that assumes multinational firms have intangible assets with public good properties. Our results do not support the hypothesis that investors value multinational firms as a means of diversifying their portfolios internationally. Journal ofBusiness, Vol. 64, No. 2 (April 1991), pp. 165-87. (Reprinted with permission of the University of Chicago.)

Published

1991-12-30

How to Cite

Merck, R., & Yeung, B. (1991). Why Investors Value Multinationality. Financial Services Review, 1(2), 183. https://doi.org/10.1016/1057-0810(91)90048-4

Issue

Vol. 1 No. 2 (1991): Financial Services Review

Section

Abstracts of Articles on Individual Financial Management

License

Copyright (c) 1991 JAI Press Inc.

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