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MNEs and market valuation of firms: a cross-sectional study of Indian electrical and electronic goods manufacturing firms

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  • B. L. Pandit
  • N. S. Siddharthan

Abstract

This paper argues that inter-firm differences in the direction of change in market valuation will depend mainly on the 'salience' and unique risk characteristics of the firms. These characteristics are largely influenced by mulinational enterprise (MNE) affiliation. The sample for the study consists of electrical and electronic manufacturing firms in India for 1994-1996. Maximum Likelihood Estimates of the Probit model show that even during a downswing in the stock market MNE affiliates were able to hold their own and increase their market valuation. These results hold good for a wide variety of products produced in this sector where both MNEs and local firms compete. The results have implications for theories relating to MNEs, stock market valuation and also for policy makers.

Suggested Citation

  • B. L. Pandit & N. S. Siddharthan, 2003. "MNEs and market valuation of firms: a cross-sectional study of Indian electrical and electronic goods manufacturing firms," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 675-681.
    • Handle: RePEc:taf:applec:v:35:y:2003:i:6:p:675-681
    DOI: 10.1080/0003684022000042991
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    Cited by:

    1. Saumitra Bhaduri & Aditi Bhattacharya, 2018. "Financial Liberalization and Allocation of Capital: Dark Side of the Moon," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 163-185, December.
    2. Pramod Kumar Naik, 2014. "R&D Intensity and Market Valuation of Firm: A Study of R&D Incurring Manufacturing Firms in India," Journal of Studies in Dynamics and Change (JSDC), ISSN: 2348-7038, Voices of Inclusive Change and Expressions- (VOICE) Trust, Dehradun, Uttarakhand, vol. 1(7), pages 295-308., November.

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