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Promoting efficiency through openness: Internationalization of capital markets and enterprises’ overseas investment efficiency

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  • Cheng, Zhengtao
  • Ding, Yong
  • Xiong, Ding

Abstract

Based on the data of Chinese multinational enterprises from 2009 to 2023, this paper examines the relationship between capital market internationalization and overseas investment efficiency (OIE) from the perspective of behavioral finance. Our findings reveal that capital market internationalization represented by the inclusion of A-shares in the MSCI index improves OIE by alleviating information asymmetry and agency costs. This paper provides new empirical evidence on the factors influencing OIE at the multinational enterprise level, and offers important implications for understanding how the opening of capital markets in emerging market countries can enhance the overseas competitiveness of enterprises.

Suggested Citation

  • Cheng, Zhengtao & Ding, Yong & Xiong, Ding, 2025. "Promoting efficiency through openness: Internationalization of capital markets and enterprises’ overseas investment efficiency," Finance Research Letters, Elsevier, vol. 85(PB).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pb:s1544612325012528
    DOI: 10.1016/j.frl.2025.107994
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    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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