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Multinationality and opaqueness

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  • Aabo, Tom
  • Pantzalis, Christos
  • Park, Jung Chul

Abstract

We investigate whether and how multinationality affects the opaqueness of the firm. We use multiple alternative measurements of multinationality and opaqueness. Spanning nearly three decades for a large sample of US non-financial firms, we find a statistically and economically significant, positive relationship between multinationality and opaqueness. We find that this positive relationship hinges on whether or not the degree of foreign involvement is compatible with the structure of the firm's foreign operations network. Our results imply that multinationality's impact on opaqueness is alleviated when there is harmony between the size of foreign involvement and the extent of the MNC network's geographic dispersion. Previous literature has implicitly assumed a simple, positive relationship. This is the first study to explicitly address the question in a comprehensive manner.

Suggested Citation

  • Aabo, Tom & Pantzalis, Christos & Park, Jung Chul, 2015. "Multinationality and opaqueness," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 65-84.
  • Handle: RePEc:eee:corfin:v:30:y:2015:i:c:p:65-84
    DOI: 10.1016/j.jcorpfin.2014.12.002
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    Cited by:

    1. Ge, Wenxia & Kim, Jeong-Bon & Li, Tiemei & Li, Yutao, 2016. "Offshore operations and bank loan contracting: Evidence from firms that set up subsidiaries in offshore financial centers," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 335-355.
    2. Amine Tarazi & Iftekhar Hasan & Ibrahim Siraj & Qiang Wu, 2016. "Value Relevance of Earnings of Multinational Firms: Regulatory Regimes Associated with Foreign Subsidiaries," Working Papers hal-01360048, HAL.
    3. repec:eee:corfin:v:44:y:2017:i:c:p:48-72 is not listed on IDEAS

    More about this item

    Keywords

    Multiple regression analysis; Internationalization theory; Stock market valuation; Stock prices; Multinationality; Opaqueness;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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