Why investors value multinationality
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Date
1991-04
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Publisher
Institute of Public Policy studies , Michigan
Abstract
We examine the value of multinationality to investors as reflected in firms q ratios. The positive impact of R&D and advertising spending on a firms q is enhanced by multinationality, but multinationality itself has no significant impact. This supports the internalization theory which holds that intangible assets are necessary to justify direct foreign investment: and thus a recent strand of trade literature which assumes that 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 internationality.
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Keywords
Multinationality