Multinational Corporations vs. Domestic Corporations: International Environmental Factors and Determinants of Capital Structure

Lee, Kwang Chul; Kwok, Chuck C.Y.

doi:10.1057/palgrave.jibs.8490381

Cited by 230 publications

(207 citation statements)

References 32 publications

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“…However, contrary views have been expressed in the international business literature (see Lee, 1986;Lee and Kwok, 1988;Burgman, 1996;Reeb et al, 1998;Mittoo and Zhang, 2008). Studies from this literature suggest that firms with foreign operations tend to have higher bankruptcy risks as well as higher agency and information asymmetry costs, which in turn, reduce their debt levels.…”

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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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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“…However, the evidence suggests that internationalisation actually gave rise to reduced gearing in US firms (Lee and Kwok, 1988;Burgman, 1996), due to the growth opportunities, increased agency costs and exchange rate risks of multinational firms. More recently, Kwok and Reeb (2000) extended their study to firms from 32 countries and found a similar negative relationship between internationalisation and gearing.…”

Section: Literature Reviewmentioning

confidence: 99%

Target gearing in the UK: a triangulated approach

Tucker

Pointon

Olugbode

2010

Int J of Managerial Finance

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PurposeThe purpose of this study is to investigate the incidence of target gearing behaviour in firms as well as the drivers of such behaviour.Design/methodology/approachThe paper employs a triangulation approach across three methodological phases: a questionnaire survey, logistic regression modelling of firm data, and interviews with finance directors. The results are then discussed under the key themes of gearing optimality, valuation issues, external drivers, the finance life‐cycle, the impact of risk, and the relationship between gearing and corporate strategy.FindingsThe results reveal that the majority of firms engage in targeting, though targets are subject to fairly frequent revision as both external and internal drivers evolve. Important external drivers include macroeconomic variables and analysts' views, whereas important internal drivers include income gearing and profitability.Practical implicationsGiven the range and variety of drivers, target gearing evidently represents a complex strategic decision for finance directors. The paper provides a benchmark perspective for finance directors when determining their firm's gearing strategy.Originality/valueThe innovation of the paper is the study of target gearing across three methods, the results of which are then triangulated to provide a deeper understanding of both the quantifiable and qualitative drivers of gearing. This provides a far broader insight into the real‐world determination of gearing strategy than a conventional empirical approach.

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“…The periodic payment of interest and (e.g., Tahirman 2000;Purba 2001;and Permana 2005). On the other hand, empirical studies in international settings which examine the debt levels of MNCs are numerous (e.g., Michael and Shaked 1986;Lee and Kwok 1988;Burgman 1996;and Chkir and Chosset 2001). In Indonesia, these studies are relatively rare (e.g., Kusuma 1999; Vera et al 2005).…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%