Firm-Level Internationalisation and the Home Bias Puzzle

43 Pages Posted: 6 Jan 2011

See all articles by Jenny Berrill

Jenny Berrill

Trinity College (Dublin) - School of Business Studies

Colm Kearney

Monash University - Monash Business School

Date Written: January 4, 2010

Abstract

The extent to which internationalising MNEs create value, and the extent to which investors can reap the benefits of firm-level internationalisation remain controversial issues. Using a multi-country dataset with over 3 million observations, we classify 1,143 firms listed on the exchanges of the G7 countries according to the geographical spread of their sales and subsidiaries. We show that more internationalised firms provide greater diversification benefits. By investing in home-based internationalised firms, investors can ‘free ride’ the costs and risks associated with internationalisation at the level of the firm and exhibit home bias while availing of international diversification benefits.

Keywords: International diversification, home bias, mean variance spanning

JEL Classification: F21, F23, G11

Suggested Citation

Berrill, Jenny and Kearney, Colm, Firm-Level Internationalisation and the Home Bias Puzzle (January 4, 2010). Journal of Economics and Business, Vol. 62, No. 4, 2010, Available at SSRN: https://ssrn.com/abstract=1734729

Jenny Berrill (Contact Author)

Trinity College (Dublin) - School of Business Studies ( email )

AAP College Green
Dublin 2
Ireland
+353 1 608 3888 (Phone)

Colm Kearney

Monash University - Monash Business School ( email )

Sir John Monash Drive
Caulfield
Melbourne, Victoria 3168
Australia
+353399031021 (Phone)

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