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Hysteresis in adjusting the ownership structure of foreign subsidiaries

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  • Axarloglou, Kostas
  • Kouvelis, Panos
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    Abstract

    In this paper we study the insight that multinational companies might delay the adjustment of the ownership structure of their foreign subsidiaries despite the fact that the fundamentals call for an immediate adjustment (hysteresis). Based on company-level data, we empirically investigate the company and industry conditions that influence the strength of the hysteresis in adjusting this ownership structure. Exchange rate volatility and adjustment cost strengthen the hysteresis in ownership adjustment decisions, while the growth of sales in the foreign market weakens it.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 16 (2007)
    Issue (Month): 4 (August)
    Pages: 494-506

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    Handle: RePEc:eee:iburev:v:16:y:2007:i:4:p:494-506

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    Keywords: Foreign direct investment Ownership adjustments;

    References

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    Cited by:
    1. Axarloglou, Kostas & Visvikis, Ilias & Zarkos, Stefanos, 2013. "The time dimension and value of flexibility in resource allocation: The case of the maritime industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 52(C), pages 35-48.
    2. Axarloglou, Kostas & Visvikis, Ilias & Zarkos, Stefanos, 2012. "The Time Dimension And Value Of Flexibility In Resource Allocation: The Case Of The Maritime Industry," DUTH Research Papers in Economics 2-2012, Democritus University of Thrace, Department of Economics.

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