Multinational Ownership and Subsidiary Investment
AbstractThis paper examines how foreign ownership affects the investment decisions of subsidiary firms using a new dataset of listed-parent - listed-subsidiary pairs.� We find that improvements in the investment opportunities of parent firms have a negative effect on the investment of their subsidiaries, after controlling for the investment opportunities of the subsidiary, which can be independently observed.� This provides evidence of internal capital markets in multinationals that reallocate funds towards units with better investment opportunities.� We also find that the negative effect of the parent's investment opportunities on subsidiary investment is greatest where the relationship is more arms-length, i.e. where parents have modest ownership stakes, are distant from their subsidiaries or when subsidiaries - as well as parents - operate in well developed financial markets.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2008fe05.
Date of creation: 01 Jan 2008
Date of revision:
Investment; Internal Capital Markets; Foreign Ownership;
Other versions of this item:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Beuselinck Ch. & Deloof M. & Vanstraelen A., 2011.
"Corporate governance and cash policies of multinational corporations,"
2011020, University of Antwerp, Faculty of Applied Economics.
- Beuselinck Christof` & Deloof Marc & Vanstraelen Ann, 2012. "Corporate governance and cash policies of multinational corporations," Research Memorandum 013, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).
If references are entirely missing, you can add them using this form.