Corporate Reputation, Internalization and the Market Valuation of Multinational Firms

Abstract:     
The paper examines the role of reputation 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 corporate reputation id high. However, greater multinationality alone does not correlate positively to a significantly greater value which differs from the tenets of imperfect capital markets theory but correlates negatively to a significantly greater value, which confirms the views of the managerial objectives theory.

Number of Pages in PDF File: 21

Keywords: Corporate reputation, internalization theory, imperfect capital markets theory, managerial objectives theory

JEL Classification: M41, M44

working papers series