Exchange rates and ownership structure of Japanese multinational firms
AbstractThis paper investigates the determinants of Japanese multinationals' ownership structures. Unlike most previous studies that neglect the impact of financial constraints on ownership, we add the exchange rate as a measure of wealth and test whether exchange rates affect the ownership share of foreign direct investment projects. After controlling for other variables that affect ownership, we find that exchange rates have a significant effect on the likelihood of wholly owned subsidiaries. We also discuss several other explanations for the link between exchange rates and foreign direct investment and provide evidence that the link stems from capital-market imperfections.
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Bibliographic InfoArticle provided by Elsevier in its journal Japan and the World Economy.
Volume (Year): 20 (2008)
Issue (Month): 4 (December)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505557
Financial constraint Foreign direct investment Japanese multinational firms Ownership structure;
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