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Are Multinational Corporations Safer?

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  • Israel Shaked

    (Boston University)

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    Abstract

    The failure-probabilities of a sample of multinational corporations (MNCs) are derived and compared with those of a control group of domestic corporations (DMCs). The results suggest that the mean insolvency-probability of DMCs is significantly higher than that of the MNCs. It is also observed that MNCs are significantly more capitalized, and the standard deviation of their equity as well as their average systematic risk are also significantly lower. Furthermore, the average insolvency probability of the DMCs is more sensitive to changes in the values of the parameters than those of the MNCs.© 1986 JIBS. Journal of International Business Studies (1986) 17, 83–106

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 17 (1986)
    Issue (Month): 1 (March)
    Pages: 83-106

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    Handle: RePEc:pal:jintbs:v:17:y:1986:i:1:p:83-106

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    Cited by:
    1. Berry, Heather & Sakakibara, Mariko, 2008. "Resource accumulation and overseas expansion by Japanese multinationals," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 65(2), pages 277-302, February.
    2. Strieborny, Martin, 2013. "Suppliers, Investors, and Equity Market Liberalizations," Working Papers, Lund University, Department of Economics 2013:12, Lund University, Department of Economics.
    3. Boardman, Anthony E. & Shapiro, Daniel M. & Vining, Aidan R., 1997. "The role of agency costs in explaining the superior performance of foreign MNE subsidiaries," International Business Review, Elsevier, Elsevier, vol. 6(3), pages 295-317, June.
    4. Anthony McDonnell & Jonathan Lavelle & Patrick Gunnigle & David G. Collings, 2007. "Management Research on Multinational Corporations: A Methodological Critique," The Economic and Social Review, Economic and Social Studies, Economic and Social Studies, vol. 38(2), pages 234-258.
    5. Lu, Jane W., 2003. "The evolving contributions in international strategic management research," Journal of International Management, Elsevier, Elsevier, vol. 9(2), pages 193-213.
    6. Pangarkar, Nitin, 2008. "Internationalization and performance of small- and medium-sized enterprises," Journal of World Business, Elsevier, Elsevier, vol. 43(4), pages 475-485, October.
    7. Jim Malley & Apostolis Philippopoulos & Ulrich Woitek, 2007. "To React or Not? Fiscal Policy, Volatility and Welfare in the EU-3," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 312, Institute for Empirical Research in Economics - University of Zurich.
    8. Olibe, Kingsley O. & Michello, Franklin A. & Thorne, Jerry, 2008. "Systematic risk and international diversification: An empirical perspective," International Review of Financial Analysis, Elsevier, Elsevier, vol. 17(4), pages 681-698, September.
    9. George Anastassopoulos, 2004. "Profitability differences between MNE subsidiaries and domestic firms: The case of the food industry in Greece," Agribusiness, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 20(1), pages 45-60.
    10. de Jong, Gjalt & van Houten, Jerry, 2014. "The impact of MNE cultural diversity on the internationalization-performance relationship," International Business Review, Elsevier, Elsevier, vol. 23(1), pages 313-326.
    11. Riahi-Belkaoui, Ahmed, 1998. "The effects of the degree of internationalization on firm performance," International Business Review, Elsevier, Elsevier, vol. 7(3), pages 315-321, June.
    12. Q Li & S Girma, . "Exporting, FDI, and Labour Demand Adjustment: Evidence from the UK Manufacturing," Working Papers, Business School - Economics, University of Glasgow 2006_18, Business School - Economics, University of Glasgow.
    13. Contractor, Farok J. & Kumar, Vikas & Kundu, Sumit K., 2007. "Nature of the relationship between international expansion and performance: The case of emerging market firms," Journal of World Business, Elsevier, Elsevier, vol. 42(4), pages 401-417, December.
    14. Lee, Seung-Hyun & Beamish, Paul W. & Lee, Ho-Uk & Park, Jong-Hun, 2009. "Strategic choice during economic crisis: Domestic market position, organizational capabilities and export flexibility," Journal of World Business, Elsevier, Elsevier, vol. 44(1), pages 1-15, January.
    15. Qian, Gongming, 1996. "The effect of multinationality measures upon the risk-return performance of US firms," International Business Review, Elsevier, Elsevier, vol. 5(3), pages 247-265, June.
    16. Qian, Gongming, 2002. "Multinationality, product diversification, and profitability of emerging US small- and medium-sized enterprises," Journal of Business Venturing, Elsevier, vol. 17(6), pages 611-633, October.
    17. Qian, Gongming & Li, Ji, 1998. "Multinationality, global market diversification, and risk performance for the largest U.S. firms," Journal of International Management, Elsevier, Elsevier, vol. 4(2), pages 149-170, October.
    18. Qian, Gongming & Li, Ji, 2002. "Multinationality, global market diversification and profitability among the largest US firms," Journal of Business Research, Elsevier, Elsevier, vol. 55(4), pages 325-335, April.

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