Abstract

http://ssrn.com/abstract=342786
 
 

References (23)



 


 



The Operational Hedging Properties of Intangible Assets: The Case of Non-voluntary Foreign Asset Selloffs


John A. Doukas


Old Dominion University - Strome College of Business

Prasad Padmanabhan


San Diego State University - Finance Department


Journal of International Financial Management and Accounting, Vol. 13, pp. 183-213, 2002

Abstract:     
In this paper we examine the valuation effects and long-term performance of US multinational firms involved in forced transfers of their foreign operating assets during the 1965-88 period. The evidence suggests that the operational hedging ability of the firm to address country risk (nationalization threats) is related to the level of its intangible assets. While it is well known that firms with high levels of intangible assets prefer foreign direct investment, our results show that intangible assets have hidden properties of protection against country risk as well. We document significantly negative abnormal returns only for divesting firms with low levels of intangible assets, but not for firms with high levels of intangible assets. In addition, we show that low (high) growth firms are involved in partial (complete) withdrawals, and show that the long-term economic performance of firms choosing the complete withdrawal strategy is better than those that opt to remain. We argue that management's attempt to maintain economic links in a hostile foreign environment can be attributed in part to the firm's low growth opportunities, performance, and lack of contingent plans to address country risk.

Number of Pages in PDF File: 31

JEL Classification: G12, M41

Accepted Paper Series





Date posted: January 5, 2003  

Suggested Citation

Doukas, John A. and Padmanabhan, Prasad, The Operational Hedging Properties of Intangible Assets: The Case of Non-voluntary Foreign Asset Selloffs. Journal of International Financial Management and Accounting, Vol. 13, pp. 183-213, 2002. Available at SSRN: http://ssrn.com/abstract=342786

Contact Information

John A. Doukas (Contact Author)
Old Dominion University - Strome College of Business ( email )
2080 Constant Hall
Suite 2080
Norfolk, VA 23529-0222
United States
757-683-5521 (Phone)
HOME PAGE: http://www.efmaefm.org/0DOUKAS/doukas.php
Prasad Padmanabhan
San Diego State University - Finance Department
5500 Campanile Drive
San Diego, CA 92182-8236
United States
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References:  23

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