Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective

International Business Review, Vol. 19, pp. 446-456, 2010

Posted: 1 Nov 2011

See all articles by Diemo Dietrich

Diemo Dietrich

Newcastle University Business School

Björn Jindra

Halle Institute for Economic Research; Copenhagen Business School

Date Written: October 31, 2011

Abstract

The aim of this paper is to bring economics-based finance research more into the focus of international business theory. On the basis of an analytical model that introduces financial constraints into incomplete contracting in an international vertical trade relationship, we propose an integrated framework that facilitates the study of the interdependencies between internalization decisions, firm-internal allocations of control rights, and the debt capacity of firms. We argue that the financial constraint of an MNE and/or its supplier should be considered as an important determinant of internal governance structures, complementary to, and interacting with, institutional factors and proprietary knowledge.

Keywords: corporate governance, financial contracting, internationalisation theory and foreign market entry, ownership/control structures

JEL Classification: G234, F23, F12

Suggested Citation

Dietrich, Diemo and Jindra, Björn, Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective (October 31, 2011). International Business Review, Vol. 19, pp. 446-456, 2010, Available at SSRN: https://ssrn.com/abstract=1951655

Diemo Dietrich (Contact Author)

Newcastle University Business School ( email )

5 Barrack Road
Newcastle-upon-Tyne NE1 7RU, NE1 4SE
United Kingdom

HOME PAGE: http://www.ncl.ac.uk/business-school/staff/profile/diemodietrich.html

Björn Jindra

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

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