The Multinational Advantage

49 Pages Posted: 28 Sep 2011 Last revised: 20 Sep 2014

Drew D. Creal

University of Chicago - Booth School of Business - Econometrics and Statistics

Leslie A. Robinson

Tuck School of Business at Dartmouth

Jonathan L. Rogers

University of Colorado at Boulder - Leeds School of Business

Sarah L. C. Zechman

University of Colorado at Boulder - Leeds School of Business

Date Written: September 1, 2014

Abstract

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

Suggested Citation

Creal, Drew D. and Robinson, Leslie A. and Rogers, Jonathan L. and Zechman, Sarah L. C., The Multinational Advantage (September 1, 2014). Fama-Miller Working Paper; Chicago Booth Research Paper No. 11-37. Available at SSRN: https://ssrn.com/abstract=1933777 or http://dx.doi.org/10.2139/ssrn.1933777

Drew D. Creal

University of Chicago - Booth School of Business - Econometrics and Statistics ( email )

Chicago, IL 60637
United States

Leslie Robinson

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603-646-4018 (Phone)

Jonathan L. Rogers

University of Colorado at Boulder - Leeds School of Business ( email )

419 UCB
Boulder, CO 80309-0419
United States

Sarah L. C. Zechman (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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