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MNEs and market valuation of firms: a cross-sectional study of Indian electrical and electronic goods manufacturing firms

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  • B. L. Pandit
  • N. S. Siddharthan
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    Abstract

    This paper argues that inter-firm differences in the direction of change in market valuation will depend mainly on the 'salience' and unique risk characteristics of the firms. These characteristics are largely influenced by mulinational enterprise (MNE) affiliation. The sample for the study consists of electrical and electronic manufacturing firms in India for 1994-1996. Maximum Likelihood Estimates of the Probit model show that even during a downswing in the stock market MNE affiliates were able to hold their own and increase their market valuation. These results hold good for a wide variety of products produced in this sector where both MNEs and local firms compete. The results have implications for theories relating to MNEs, stock market valuation and also for policy makers.

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    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Applied Economics.

    Volume (Year): 35 (2003)
    Issue (Month): 6 ()
    Pages: 675-681

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    Handle: RePEc:taf:applec:v:35:y:2003:i:6:p:675-681

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    References

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    1. Pandit, B. L. & Siddharthan, N. S., 1998. "Technological acquisition and investment: lessons from recent indian experience," Journal of Business Venturing, Elsevier, vol. 13(1), pages 43-55, January.
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    7. Lall, Sanjaya & Siddharthan, N S, 1982. "The Monopolistic Advantages of Multinationals: Lessons from Foreign Investment in the U.S," Economic Journal, Royal Economic Society, vol. 92(367), pages 668-83, September.
    8. Vernon, Raymond, 1979. "The Product Cycle Hypothesis in a New International Environment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 255-67, November.
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    Cited by:
    1. Pramod, Kumar Naik & Krishnan, Narayanan & Puja, Padhi, 2012. "R&D intensity and market valuation of firm: a study of R&D incurring manufacturing firms in India," MPRA Paper 37299, University Library of Munich, Germany.

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