Abstract

http://ssrn.com/abstract=1939494
 
 

References (80)



 
 

Citations (2)



 


 



Information Environment and the Investment Decisions of Multinational Corporations


Nemit Shroff


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Rodrigo S. Verdi


Massachusetts Institute of Technology (MIT)

Gwen Yu


Harvard Business School

September 25, 2013

The Accounting Review, Vol. 89, No. 2, pp. 759-790, March 2014
MIT Sloan Research Paper No. 4942-11

Abstract:     
This paper examines how the external information environment in which foreign subsidiaries operate affects the investment decisions of multinational corporations (MNCs). We hypothesize and find that the investment decisions of foreign subsidiaries in country-industries with more transparent information environments are more responsive to local growth opportunities than are those of foreign subsidiaries in country-industries with less transparent information environments. Further, this effect is larger when (i) there are greater cross-border frictions between the parent and subsidiary, and (ii) the parents are relatively more involved in their subsidiaries’ investment decision-making process. Our results suggest that the external information environment helps mitigate the agency problems that arise when firms expand their operations across borders. This paper contributes to the literature by showing that the external information environment helps MNCs mitigate information frictions within the firm.

Number of Pages in PDF File: 51

Keywords: Corporate Investment, Investment Efficiency, Information Environment, Information Quality, Information Asymmetry, Multinational Corporations, MNCs, Financial Reporting Quality, Transparency

JEL Classification: D83, D9, F3, G30, G31, H25, H26, M41, O4

Accepted Paper Series


Download This Paper

Date posted: October 6, 2011 ; Last revised: March 29, 2014

Suggested Citation

Shroff, Nemit and Verdi, Rodrigo S. and Yu, Gwen, Information Environment and the Investment Decisions of Multinational Corporations (September 25, 2013). The Accounting Review, Vol. 89, No. 2, pp. 759-790, March 2014; MIT Sloan Research Paper No. 4942-11. Available at SSRN: http://ssrn.com/abstract=1939494 or http://dx.doi.org/10.2139/ssrn.1939494

Contact Information

Nemit Shroff (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
6173240805 (Phone)
HOME PAGE: http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=51407&co_list=F
Rodrigo S. Verdi
Massachusetts Institute of Technology (MIT) ( email )
Sloan School of Management
100 Main Street E62-679
Cambridge, MA 02142
United States
(617) 253 2956 (Phone)
Gwen Yu
Harvard Business School ( email )
Soldiers Field Road
Morgan 383
Boston, MA 02163
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,542
Downloads: 722
Download Rank: 17,481
References:  80
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.453 seconds