FDI Theories and the Performance of Foreign Multinationals Operating in the U.S
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
Volume (Year): 21 (1990)
Issue (Month): 1 (March)
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