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Managerial Incentives, Internalization, and Market Valuation of Multinational Firms

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  • Chandra S Mishra

    (Oregon State University)

  • David H Gobeli

    (Oregon State University)

Abstract

This paper examines the role of firm technology investment, in concert with managerial incentives alignment, to explain the relative market value compared to the accounting value for a multinational firm. The results are consistent with internalization theory in that greater multinationality corresponds to a higher valuation of the firm if technology investment is high, and the impact is even greater if managerial incentives alignment is high as well. However, greater multinationality alone does not correlate to a significantly greater value, which differs from the tenets of imperfect capital markets theory.© 1998 JIBS. Journal of International Business Studies (1998) 29, 583–597

Suggested Citation

  • Chandra S Mishra & David H Gobeli, 1998. "Managerial Incentives, Internalization, and Market Valuation of Multinational Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(3), pages 583-597, September.
  • Handle: RePEc:pal:jintbs:v:29:y:1998:i:3:p:583-597
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    Cited by:

    1. Wooster, Rossitza B. & Paul, Donna L., 2016. "Leadership positioning among U.S. firms investing in China," International Business Review, Elsevier, vol. 25(1), pages 319-332.
    2. repec:spr:manint:v:54:y:2014:i:2:d:10.1007_s11575-013-0187-y is not listed on IDEAS
    3. repec:spr:manint:v:49:y:2009:i:4:d:10.1007_s11575-009-0002-y is not listed on IDEAS
    4. Berrill, Jenny & Kearney, Colm, 2010. "Firm-level internationalisation and the home bias puzzle," Journal of Economics and Business, Elsevier, vol. 62(4), pages 235-256, July.
    5. Kyaw, NyoNyo A. & Manley, John & Shetty, Anand, 2011. "Factors in multinational valuations: Transparency, political risk and diversification," Journal of Multinational Financial Management, Elsevier, vol. 21(1), pages 55-67, February.
    6. repec:spr:manint:v:52:y:2012:i:1:d:10.1007_s11575-011-0095-y is not listed on IDEAS
    7. Dikova, Desislava & Witteloostuijn, Arjen van, 2005. "Managerial satisfaction with subsidiary performance; the influence of the parent MNE's capabilities and the subsidiary's environment," Research Report 05G07, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    8. Chari, Murali D.R. & Devaraj, Sarv & David, Parthiban, 2007. "International diversification and firm performance: Role of information technology investments," Journal of World Business, Elsevier, vol. 42(2), pages 184-197, June.
    9. Garbe, Jan-Nicolas & Richter, Nicole Franziska, 2009. "Causal analysis of the internationalization and performance relationship based on neural networks -- advocating the transnational structure," Journal of International Management, Elsevier, vol. 15(4), pages 413-431, December.
    10. Aggarwal, Raj & Berrill, Jenny & Hutson, Elaine & Kearney, Colm, 2011. "What is a multinational corporation? Classifying the degree of firm-level multinationality," International Business Review, Elsevier, vol. 20(5), pages 557-577, October.
    11. repec:dgr:rugsom:05g07 is not listed on IDEAS
    12. Eckert, Stefan & Dittfeld, Marcus & Muche, Thomas & Rässler, Susanne, 2010. "Does multinationality lead to value enhancement? An empirical examination of publicly listed corporations from Germany," International Business Review, Elsevier, vol. 19(6), pages 562-574, December.

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