Is indirect international diversification desirable?

International Portfolio Choice and Corporation Finance: A Synthesis

“…Basically, a multiple regression of MNC returns on various national indices showed that these firms correlate highly with their respective national indices and very little with foreign stock markets. These negative results were confirmed by Brewer [31] and Senschak and Beedles [173]. The issue is not easy to settle empirically, as noted in Adler [2].…”

The Effect of Corporate Multinationalism on Shareholders' Wealth: Evidence from International Acquisitions

“…Jacquillat and Solnik [22], using a sample of forty European and twenty‐three U.S. firms, concluded that investing in multinationals is a poor substitute to international portfolio diversification. Recently, Senchack and Beedles [31] arrived at the same conclusion. Hughes, Logue, and Sweeney [21] showed that the results obtained in all these studies are sensitive to the market index (e.g., domestic versus world) used to compute the betas.…”

Internationalization of US multinational hotel companies: Expansion to Asia versus Europe

“…However, several studies argued against the theory by showing no difference in firm value when comparing domestic and MNCs (Brewer, 1981;Fatemi, 1984;Jacquillat and Solnik, 1978;Michel and Shaked, 1986;Morck and Yeung, 1991;Senchack and Beedles, 1980). The theory may not hold because investors might place an investment directly in an international portfolio, not in an internationally diversified multinational firm (Adler and Dumas, 1983).…”