Corporate Reputation, Internalization and the Market Valuation of Multinational Firms
21 Pages Posted: 17 Jul 2003
Date Written: May 20, 2003
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.
Keywords: Corporate reputation, internalization theory, imperfect capital markets theory, managerial objectives theory
JEL Classification: M41, M44
Suggested Citation: Suggested Citation