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Exchange rates and ownership structure of Japanese multinational firms

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  • Kasuga, Hidefumi

Abstract

This 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 Info

Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 20 (2008)
Issue (Month): 4 (December)
Pages: 661-678

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Handle: RePEc:eee:japwor:v:20:y:2008:i:4:p:661-678

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Web page: http://www.elsevier.com/locate/inca/505557

Related research

Keywords: Financial constraint Foreign direct investment Japanese multinational firms Ownership structure;

References

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  13. Ramachandran, Vijaya, 1993. "Technology Transfer, Firm Ownership, and Investment in Human Capital," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 664-70, November.
  14. Chol Lee & Paul W Beamish, 1995. "The Characteristics and Performance of Korean Joint Ventures in LDCS," Journal of International Business Studies, Palgrave Macmillan, vol. 26(3), pages 637-654, September.
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  16. Lee, Jeong-Yeon & Mansfield, Edwin, 1996. "Intellectual Property Protection and U.S. Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 181-86, May.
  17. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  18. Elizabeth Asiedu & Hadi Salehi Esfahani, 2001. "Ownership Structure In Foreign Direct Investment Projects," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 647-662, November.
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