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Copyright of Journal of International Business Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Journal of International Business Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Motivated by the international business literature that examines the interactions between political forces and business environments, we investigate whether and how political connections affect managers’ voluntary disclosure choices. We show that compared to non-connected firms, connected firms issue fewer management earnings forecasts. In addition, relative to non-connected firms, connected firms have a greater increase in the frequency of management forecasts subsequent to the elections that damage their political ties. Further analyses suggest that lack of capital market incentives, reduced litigation risk, and lower proprietary costs shape politically connected firms’ unique voluntary disclosure choices. [ABSTRACT FROM AUTHOR]

The accelerating pace of global capital market integration has provided new opportunities for firms to raise capital abroad through global debt issues, cross-listings, and initial public offerings in foreign stock exchanges. However, existing empirical evidence suggests that foreign firms tend to be at a disadvantage compared with domestic firms, and they often suffer from investors' "home bias". The objective of this paper is to understand why firms are facing problems when accessing capital in foreign markets, and possible mechanisms that can help to mitigate these problems. It expands the liability of foreignness (LOF) research beyond the product market domain to include liabilities faced by firms attempting to secure resources in foreign capital markets. We identify key differences between product and capital markets related to information environment, time structure of transactions, and linkages between buyers and sellers. We analyze institutional distance, information asymmetry, unfamiliarity, and cultural differences as the main sources of capital market LOF (CMLOF). We suggest possible mechanisms that managers can employ to mitigate CMLOF and overcome investors' "home bias": bonding, signaling, organizational isomorphism, and reputational endorsements. We also outline directions for further theoretical and empirical development of the CMLOF research. [ABSTRACT FROM AUTHOR]

This study examines the impact of Anglo-American financial markets on CEO compensation. Starting from a sample of Norwegian and Swedish listed firms, we analyse this effect as manifested in the capital market (Anglo-American cross-listing) and in the market for corporate control (Anglo-American board membership). These effects are analysed together with the geographically broader effect of the product and service market internationalisation of the firm. We conclude that all three effects contribute positively to the level of CEO compensation. We argue that the higher CEO compensation found in firms exposed to Anglo-American financial influence -- as compared with firms not subject to such influence -- reflects institutional contagion, the demand for and supply of viable CEO candidates, and a pay premium for increased risk of dismissal. [ABSTRACT FROM AUTHOR]

Information and communication technologies have given rise to a new type of firm, the ibusiness firm. These firms offer a platform that allows users to interact with each other and generate value through user co-creation of content. Because of this, ibusiness firms face different challenges when they internationalize compared with traditional firms, even those online. In this article we extend existing internationalization theory to encompass this new type of organization. We theorize that because ibusiness firms produce value through the creation and coordination of a network of users, these firms tend to suffer greater liabilities of outsidership when expanding abroad and therefore concentrate on network and diffusion-based user adoption processes as they internationalize. Based on a multi-case investigation of a sample of ibusiness firms, we develop new theory and testable hypotheses. Thus, we make an important contribution by expanding internationalization theory to a new set of firms. [ABSTRACT FROM AUTHOR]

Abstract. This study investigates the extent to which the disclosure requirements of the London Stock Exchange relating to company annual reports are complied with or exceeded by Continental European companies listed on the Exchange. It was found that the companies exceeded Exchange requirements through a wide range of voluntary disclosures, which in some cases were substantial. The significance of the Stock Exchange requirements appeared to be relatively minimal compared to competitive pressures associated with the need to raise capital in the international capital market context. At the same time, there were peristent national characteristics in the pattern of items voluntarily disclosed. [ABSTRACT FROM AUTHOR]

The growing internationalization of capital markets suggests that an increasing number of firms perceive the benefits of listing their stocks on foreign exchanges as outweighing the related costs. Many other firms, however, still limit listing their securities to their domestic exchanges. This study investigates the motives for listing abroad. The empirical analyses, based on data on 481 multinationals, indicate significant association between the likelihood of listing abroad and 1) the relative size of a firm in its domestic capital market, 2) the ratio of foreign to total sales. [ABSTRACT FROM AUTHOR]

Abstract. This note shows that the explanation of Direct Foreign Investment based on the existence of a currency premium implies a bias in the home capital market of the multinational firm. An alternative and complementary explanation of the choice between Licensing and Direct Foreign Investment may be found in "disagreements" in the negotiations for a license. [ABSTRACT FROM AUTHOR]

Abstract. The paper substantiates the intuitive argument for international portfolio diversification-diversification that is not limited to the developed markets, but also includes the corporate securities of less developed countries (LDCs). Such diversification, in light of all the available evidence, appears to be desirable from the standpoint of the investor. Capital flows resulting from international diversification can tremendously improve liquidity position of the developing countries and provide a major development Impact by increasing the probability of success of the capital market development programs being pursued by many LDCs; e.g., Brazil, Venezuela, Colombia, Indonesia, Nigeria, and Korea. [ABSTRACT FROM AUTHOR]

The article discusses an alternative source of long-term capital that a multinational corporation can tap for worldwide expansion. The availability of more alternatives in the decision making process is one of the most important distinguishing characteristics between the management function in an international business enterprise and the management of a firm which operates strictly within national confines. Conceptually, the domestic market does not pose any difficulties. However, when considerations of cost, availability, or foreign exchange induce a corporation to raise funds in the capital market of a country other than its own, it will frequently find itself frustrated in its efforts because the access to national markets is often blocked by direct government control or effective underwriter cartels. To the extent the data for U.S. corporations are representative of the total situation, funding in the Eurobond market is very significant.

We examine whether certification by an internationally recognized information intermediary helps emerging-market firms overcome the liability of foreignness in capital markets. Specifically, we ask whether securing a credit rating from Standard & Poor's (S&P) enables these firms to certify their financial reporting quality. We hypothesize that the unique information demands of lenders motivate firms to provide more conservative financial statements upon securing an S&P rating. We find evidence consistent with this conjecture. Moreover, the rating appears to be part of an international expansion strategy for these firms, and is followed by increased international activity in capital and product markets. [ABSTRACT FROM AUTHOR]

Drawing on social capital theory and the international business literature, we argue that domestic geography, in terms of localized potential social capital, facilitates individual firms' awareness of business opportunities, including knowledge related to involvement in the foreign markets for goods and technology, thereby enhancing firms' involvement in those foreign markets. When potential social capital reaches a certain threshold, it may work to trap firms into operating only within their home regions, thus reducing involvement in foreign markets. We conjecture that firms' research and development investment moderates the relationship between potential social capital and degree of involvement in foreign markets, but given the very different properties of the two markets, with different signs for each market: a positive moderation effect for the markets for goods, and a negative effect for the markets for technology. We find empirical support for our arguments based on a representative sample of around 2000 Italian firms. [ABSTRACT FROM AUTHOR]

According to transaction cost economics (TCE) reasoning, firms choose equity (as opposed to non-equity) foreign market entry modes to safeguard specific assets. The present paper contextualizes the well-researched relationship between asset specificity and foreign market entry mode choice by introducing knowledge safeguards (international experience, host-country networks, and imitation) and institutional safeguards (property rights protection and cultural proximity) as alternative mechanisms for securing a firm's specific assets. Testing our hypotheses on a sample of 206 small and medium-sized enterprises, we find that knowledge safeguards and institutional safeguards weaken the effect of asset specificity on the choice of equity foreign market entry modes. Contextualizing the relationship between asset specificity and foreign market entry mode choice helps to enhance our understanding of the scope conditions of TCE-based entry mode studies and beyond. [ABSTRACT FROM AUTHOR]

It is well established that a link exists between a country's legal system and the size, liquidity, and value of its capital markets. We study how differences in country-level governance affect the underpricing of initial public offerings (IPOs). Examining 4462 IPOs across 29 countries from 2000 to 2004, we find the surprising result that underpricing is higher in countries with corporate governance that strengthens the position of investors relative to insiders. We conjecture that when countries give outsiders more influence, IPO issuers underprice more to generate excess demand for the offer, which in turn leads to greater ownership dispersion and reduces outsiders' incentives to monitor the behavior of corporate insiders. In other words, underpricing is a cost that insiders pay to maintain control in countries with legal systems designed to empower outsiders. Consistent with this control motivation for underpricing, we find that underpricing has a negative association with post-IPO outside blockholdings and a positive association with private control benefits. In addition, firms whose insiders are entrenched either by majority ownership or by dual-class structures do not underprice more in countries with better governance. In these firms the ownership structure protects managers from outside influence, eliminating the incentive to increase outside ownership dispersion through underpricing. [ABSTRACT FROM AUTHOR]

This paper examines the effect of global diversification on firm value using a data set of US firms from 1994 to 2002. We document that global diversification enhances firm value. Specifically, we find that Tobin's q, our proxy for firm value, increases with foreign sales (measured as a fraction of the firm's total sales), even after we control for well-known determinants of firm value. In contrast, we find no such evidence for industrial diversification. We find evidence of both financial and real effects driving such a value enhancement from global diversification. Furthermore, we find that the valuation benefits from global diversification are higher if the firm diversifies into countries with creditor rights that are stronger than those of the United States. Our results are also robust to controlling for the firm's endogenous choice to diversify across countries or across industries. Our study is anchored by the theories of both the financial and real dimensions of global diversification, and our results support both theories. Overall, our results provide a unifying view that global diversification benefits are driven by both the real and financial dimensions. [ABSTRACT FROM AUTHOR]

An analysis of 924 foreign market entries made by a sample of Chinese exporters reveals that psychic distance moderates the relationship between foreign market size and entry sequence. In doing so, this study challenges the extant hypothesis that the establishment of foreign operations conforms to a simple pattern of increasing psychic distance to markets. The findings also reveal that psychic distance is asymmetrical in nature, and that assessments made by sellers and their buyers are inherently inequivalent. [ABSTRACT FROM AUTHOR]

In contrast to the much-studied role of capital markets in fostering convergence in corporate governance practices worldwide, we argue that the globalization of product and talent markets has affected corporate governance of firms in the Indian software industry. We model several possible reasons why a particular firm, Infosys, has emerged as the exemplar of good corporate governance in India, traditionally a backwater of corporate governance practices. We further analyze the manner in which Infosys has attempted to shape corporate governance practices in India more generally, and why these attempts have had limited effects thus far. [ABSTRACT FROM AUTHOR]

Abstract. All international investments inevitably have some diversification consequences. Yet, the literature on foreign direct investment accords only a limited role to diversification or financial variables. This paper develops a theory of corporate international investment from the standpoint of finance in an environment where the segmentation of international capital markets for individuals or the presence of agency costs provide some independence to corporate decisions separate from shareholders. The model does not depend on any particular advantage of multinational firms, and it specifies the stochastic properties of domestic and foreign output and input prices. It is found that real exchange risk and diversification gains affect corporate international investment in a significant way. It is also shown that the model embodies several existing explanations based on behavioral and economic variables. [ABSTRACT FROM AUTHOR]

Abstract. This study develops equilibrium yield relationships between otherwise similar dollar denominated Eurobonds and U.S. bonds with the use of supply and demand conditions and the standard arbitrage argument. It then empirically tests the hypothesis that no yield differentials exist between similar securities in these two markets. A matched pair sample of these bonds is obtained on the basis of five criteria: (a) same parent; (b) same rating; (c) similar coupon rates; (d) similar time to maturity; and (e) yield observations from the same month. Empirical results obtained during 1975 to 1983 shows that dollar Eurobond yields do not differ from domestic bond yields for comparable securities. This implies that these two markets are either devoid of systematic and material imperfections, or if any such imperfections do exist, their pricing influence is similar in both markets. It is also observed that issue size, issuer's rating and the market's familiarity with the issuer do not uniquely influence Eurobond pricing any differently than domestic U.S. bond pricing. [ABSTRACT FROM AUTHOR]

This article discusses trends in the world economy. The global recession of 1980-83 was the deepest since the Great Depression of the 1930s, but in 1984, the world economy experienced a strong recovery. Although no simple model can be a full explanation of this problem, the principal causal chain appears to be the following. It starts with the unprecedented size of the U.S. structural budgetary deficit that is projected to run at an annual level of $200 billion or more for the rest of the 1980s unless drastic steps are taken to cut expenditures and/or raise taxes. By feeding expectations of higher inflation rates, by threatening to "crowd out" private borrowing in capital markets, by forcing reliance on tight monetary policies, and by generating more uncertainty, the federal deficit has supported historically high real interest rates in the United States. The dominating trend in the world economy over the next quarter-century or more is the speed-up of an industrialization/innovation process that is creating a new global industrial map. The new global industrial map will create a business environment for multinational corporations that differs radically from the business environment of the quarter century following World War II.

This article presents an abstract of Francis William Wright's dissertation, The Differential Effects of Agency Costs on Multinational Corporations: Theory and Evidence. The corporate form of business organization has associated with it potentially significant agency costs. These costs arise principally from the separation of ownership and control interests in the firm. While it is widely believed that multinational corporations with substantial foreign market exposure face higher agency costs than less exposed multinational corporations or domestic firms, empirical evidence in support of this contention is largely absent from the literature. This dissertation uses capital market data to empirically examine the theory that multinational corporations with substantial exposure to foreign markets incur greater agency costs than less exposed multinational corporations or domestic corporations. Using the agency cost perspective of common shareholders, this study tests for evidence of a differential agency cost effect for multinational corporations by examining the market reaction to a series of events that should tend to signal a change in the level of agency costs for all firms. An event-study methodology is used to measure the abnormal returns associated with the announcements of four separate events: debt offerings; equity offerings; organizational restructurings; and takeover defenses.

This article presents an abstract of Patricia Marie Poli's, dissertation, Functional Currency: Effects on Earnings and the Market. This study investigates whether or not the use of different functional currencies affects the quality of earnings and related capital market activity of U.S.-based multinational corporations. The study shows that the aggregate earnings response coefficients are lower and the earnings streams are more volatile and less permanent for companies using the U.S. dollar as the functional currency and that the foreign currency adjustments do not fully explain the different earnings response coefficients even though they are a transitory component of earnings. When earnings are further disaggregated into their foreign and domestic components, companies using the U.S. dollar as the functional currency have less permanent earnings streams for these two components. However, the earnings response coefficients of the two groups are not different for either component. It is concluded that the translation adjustment should not be reported on the income statement because it is a transitory component of earnings and is associated with lower earnings response coefficients. It is also suggested that use of the U.S. dollar as the functional currency motivates companies to make other non-optimal economic decisions that obscure the true earnings results.

This section presents an abstract of the study, International Joint Venture: An Analysis of the Effect of Joint Venture Formation on Shareholder Wealth, written by Phornchai Sakullelarasmi. The purpose of the study is to empirically investigate the effect of international joint venture formation on shareholder wealth. The period under investigation was from 1972 to 1987. The statistical significance of the capital market reaction to the joint venture formations was examined by using the standard event study methodology. The results, in general, support the wealth effect of international joint venture formation.

The article presents an abstract of the dissertation entitled "Globalization of International Financial Markets; Causes and Consequences," by Hak-Min Kim and Brian J. L. Berry. This study investigates the causes and consequences of globalization of international financial markets, including all types of private sector capital for 121 countries for the period 1980-1990. Globalization of international financial markets, a crucial component of the secular process of increasing functional integration of the global economy, while widely recognized and discussed, has not been subject to thorough empirical analysis. In this study, globalization institutions and technologies that lower national financial boundaries, provide improved information, and reduce transaction costs are assessed in terms of their qualitative and quantitative impacts on financial globalization. Globalization of international financial markets has been accelerated by such specific factors as increasingly open financial markets, participation in international tax treaties, financial instrument innovation, and telecommunication network development. In globalized financial markets, monetary policy plays a limited role in inducing foreign capital: more effective means of stimulating capital inflow include the provision of new financial instruments, advanced telecommunication networks, and improved country risk management.

This article presents an abstract of the research paper "Corporate Myopia and Firm Performance: An International Comparison," by Sriram Beldona. The U.S. managers have traditionally been criticized as having a myopic view of their firm's future as compared to their Japanese counterparts. The critics point to the success of Japanese corporations in global markets as evidence of the long-term vision of Japanese managers. These criticisms have intensified over the last few years. This issue has attracted more attention and been more widely discussed in the popular business press than in academia. This research develops a model of corporate myopia based on arguments from agency and efficient market theories. The upper echelon theory in management is also used to explain the myopic behavior of managers. It is argued that executive reward systems, consisting of a high proportion of long-term compensation along with insider ownership of equity, will have a negative effect on corporate myopia. In contrast, concentration of institutional ownership of equity and capital structure, along with executive tenure, are hypothesized to have a positive effect on corporate myopia. Finally, corporate myopia is posited to have a negative effect on firm performance.