The Multinational Advantage
49 Pages Posted: 28 Sep 2011 Last revised: 20 Sep 2014
Date Written: September 1, 2014
Using a confidential dataset, we evaluate whether the degree of foreign operations affects U.S. multinational corporation (MNC) value by comparing actual value to imputed value for these firms. We control for differences in discount rates and expected growth rates across countries and industries through time with benchmark firms matched on these dimensions. This isolates the value effects of organizing otherwise independent activities within a multinational network. Our analyses offer robust evidence of a MNC value premium relative to a benchmark portfolio of independent firms operating in the same country-industry footprint as the MNC.
Keywords: firm valuation, segment reporting, international accounting, multinational corporations
JEL Classification: F23, G32, G34, M41
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