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FDI Theories and the Performance of Foreign Multinationals Operating in the U.S

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  • Wi Saeng Kim

    (Rutgers University)

  • Esmeralda O Lyn

    (Hofstra University)

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    Abstract

    Based on firm-specific financial data, performance of foreign multinationals operating in the U.S. is evaluated to determine if they enjoy advantages over U.S. firms. Results of this study indicate that foreign firms operating in the U.S. are less profitable than randomly selected U.S. firms, that they spend more in research and development but less in advertising, and that they have higher debt levels combined with higher liquidity. In addition, the findings also demonstrate that the determinants of excess market value, as measured by Tobin’s q, differ between foreign-owned firms and American-owned firms, and that the performance of foreign multinational differ by country of origin. This suggests that foreign-owned firms may have different reasons for investing in the U.S. and that foreign multinationals present investment opportunities to the U.S. investors distinct from American firms.© 1990 JIBS. Journal of International Business Studies (1990) 21, 41–54

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    Bibliographic Info

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

    Volume (Year): 21 (1990)
    Issue (Month): 1 (March)
    Pages: 41-54

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    Handle: RePEc:pal:jintbs:v:21:y:1990:i:1:p:41-54

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    Cited by:
    1. Tan, Benjamin & Erramilli, Krishna & Liang, Tan Wee, 2001. "The influence of dissemination risks, strategic control and global management skills on firms' modal decision in host countries," International Business Review, Elsevier, Elsevier, vol. 10(3), pages 323-340, June.
    2. Oh, Chang Hoon & Rugman, Alan M., 2012. "Regional integration and the international strategies of large European firms," International Business Review, Elsevier, Elsevier, vol. 21(3), pages 493-507.
    3. Azrak, Paul & Wynne, Kevin, 1995. "Protectionism and Japanese direct investment in the United States," Journal of Policy Modeling, Elsevier, Elsevier, vol. 17(3), pages 293-305, June.
    4. Añón Higón, Dolores & Manjón Antolín, Miguel, 2012. "Multinationality, foreignness and institutional distance in the relation between R&D and productivity," Research Policy, Elsevier, Elsevier, vol. 41(3), pages 592-601.
    5. 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.
    6. Berrill, Jenny & Kearney, Colm, 2010. "Firm-level internationalisation and the home bias puzzle," Journal of Economics and Business, Elsevier, Elsevier, vol. 62(4), pages 235-256, July.
    7. repec:rze:efinan:v:9:y:2012:i:2:p:24-33 is not listed on IDEAS
    8. Moon, Hwy-Chang & Roehl, Thomas W., 2001. "Unconventional foreign direct investment and the imbalance theory," International Business Review, Elsevier, Elsevier, vol. 10(2), pages 197-215, April.
    9. Tatiana Varcholova & Stela Beslerova, 2013. "Ownership Structure And Company Performance – Research And Literature Review," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 9(2), pages 24-33, October.
    10. Tsai, Huei-Ting, 2014. "Moderators on international diversification of advanced emerging market firms," Journal of Business Research, Elsevier, Elsevier, vol. 67(6), pages 1243-1248.
    11. P. B. Oyelere & C. R. Emmanuel, 1998. "International transfer pricing and income shifting: evidence from the UK," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 7(4), pages 623-635.
    12. Cravens, Karen S. & Shearon, Winston Jr., 1996. "An outcome-based assessment of international transfer pricing policy," The International Journal of Accounting, Elsevier, Elsevier, vol. 31(4), pages 419-443.

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