Corporate International Diversification and Market Assigned Measures of Risk and Diversification

Hughes, John S.; Logue, Dennis E.; Sweeney, Richard J.

doi:10.2307/2330611

Cited by 185 publications

(76 citation statements)

References 16 publications

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“…Extant studies (e.g., Hughes, Logue, & Sweeney, 1975;Fatemi, 1984;Michel and Shaked, 1986) show evidence that internationalization enables MNCs to have lower systematic risk, idiosyncratic risk, and total risk than domestic firms. Along this line, Allayannis and Ofek (2001) and Choi and Jiang (2009) find that MNCs may possess a superior capability to reduce exposure to market risks by means of derivatives.…”

Section: Epu and Derivatives Usementioning

confidence: 99%

Policy uncertainty, derivatives use, and firm-level FDI

2017

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We explore the link between uncertainty in economic policy, firm-level FDI, and firm hedging behavior -building upon a newspaper-based index of economic policy uncertainty (EPU). We find that the relative difference in EPU between home and host country has a significant relationship with FDI. Firms increase their FDI level in countries, which have a low level of EPU relative to their home country. In addition, firms use derivatives more intensively in response to an increase in EPU. Interestingly, the link between EPU and corporate derivatives use varies according to the type of firm. Domestic MNCs make the most effective use of derivatives to hedge against EPU exposure. Journal of International Business Studies (2018) 49, 96-126.

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Section: Epu and Derivatives Usementioning

confidence: 99%

Policy uncertainty, derivatives use, and firm-level FDI

2017

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“…It has also been suggested that international diversification (crossborder acquisitions) may lead to lower earnings volatility as international firms are able to receive cash flows from imperfectly correlated foreign markets, which then lead to a lower cost of borrowing for them (e.g. Hughes et al, 1975;Fatemi, 1984;Reeb et al, 2001). Overall, these arguments suggest that cross-border acquisitions should enhance the borrowing ability of cross-border acquirers by reducing their bankruptcy risks.…”

Section: The Potential Link Between Cross-border Acquisitions and Levmentioning

confidence: 99%

Cross-border acquisitions and financial leverage of UK acquirers

Agyei‐Boapeah

2015

Accounting Forum

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Based on a sample of 782 acquisitions by UK firms during 1982-2009, this paper examines the impact of cross-border acquisitions on financial leverage. The paper shows that cross-border acquisitions have a negative impact on the financial leverage of acquiring firms. However, the negative impact of crossborder acquisitions disappears when acquirers choose targets from developed countries, and also when the acquisitions are undertaken by multinational firms. Collectively, the findings imply that exposure to foreign markets reduces the borrowing ability of acquiring firms especially when they choose targets from developing countries, and when they have no experience in foreign markets.

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“…Regarding studies of the relationship between multinational and local companies' debt structure; Hughes, Logue, and Sweeney (1975), Shapiro (1978), Lee and Kwok (1988), Burgman (1996), Kwok and Reeb (2000), and Lin and Hung (2012) indicate that the borrowing rate of multinational companies is lower than that of domestic companies. Greenaway, Guariglia and Kneller (2007) states that the debt ratio of exporting firms is less than that of non-exporting firms.…”

Section: Introductionmentioning

confidence: 99%

The Effect of International Trading Activities of Firms on Their Financial Structure

Esen

Şimdi²,

Ergüzel³

2016

IBR

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This study aims to find out the impacts of international trading activities of firms on the their capital structure and profitability by using panel data analysis of the manufacturing companies listed in Istanbul Stock Exchange (ISE) for the period of 2009-2014. For this purpose we analyzed 107 manufacturing firms that declared international trade and financial data figures. We observed an inverse effect of import level on the long-term debt ratio and the negative impact of export level on the profitability. Every one-unit increase in import ratio decreases long term debt ratio by 0.0764, and every one-unit increase in export ratio decreases profitability by 0.0517. According to empirical findings there is no effect of import level on the short-term debt ratio, shareholder equity ratio and profitability. At the same time there is no effect of export level on the long term debt ratio, short term debt ratio and shareholder equity ratio.

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Corporate International Diversification and Market Assigned Measures of Risk and Diversification

Cited by 185 publications

References 16 publications

Policy uncertainty, derivatives use, and firm-level FDI

Policy uncertainty, derivatives use, and firm-level FDI

Cross-border acquisitions and financial leverage of UK acquirers

The Effect of International Trading Activities of Firms on Their Financial Structure

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