Norma Ortiz , Carlos Jaramillo Zambrano , Urbi Garay , Diego F. Tellez-Falla
{"title":"A new side of deglobalization: Why did US multinational corporations deconsolidate their subsidiaries from Venezuela?","authors":"Norma Ortiz , Carlos Jaramillo Zambrano , Urbi Garay , Diego F. Tellez-Falla","doi":"10.1016/j.jbusres.2024.114765","DOIUrl":null,"url":null,"abstract":"<div><p>This study explored the deconsolidation of Venezuelan subsidiaries by 15 U.S. Multinational Corporations (MNCs) during the severe economic and political crisis of 2015. We used a probit model and decision tree classifier to examine how foreign exchange losses and the industry sector influenced this decision. We found that consumer goods MNCs and those with large losses were more likely to be deconsolidated. Deconsolidation may be a common response in other troubled emerging markets, especially in a deglobalized world. We contend that deconsolidation improves stakeholder quality and the transparency of financial reporting. In addition, an MNC’s subsidiary deconsolidation is the middle ground between doing nothing and divesting. This study fills a gap in the academic literature on deconsolidation that has been largely overlooked in the past. This raises new questions and challenges for scholars seeking to promote financial reporting transparency in a changing global environment.</p></div>","PeriodicalId":15123,"journal":{"name":"Journal of Business Research","volume":null,"pages":null},"PeriodicalIF":10.5000,"publicationDate":"2024-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Business Research","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0148296324002698","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
This study explored the deconsolidation of Venezuelan subsidiaries by 15 U.S. Multinational Corporations (MNCs) during the severe economic and political crisis of 2015. We used a probit model and decision tree classifier to examine how foreign exchange losses and the industry sector influenced this decision. We found that consumer goods MNCs and those with large losses were more likely to be deconsolidated. Deconsolidation may be a common response in other troubled emerging markets, especially in a deglobalized world. We contend that deconsolidation improves stakeholder quality and the transparency of financial reporting. In addition, an MNC’s subsidiary deconsolidation is the middle ground between doing nothing and divesting. This study fills a gap in the academic literature on deconsolidation that has been largely overlooked in the past. This raises new questions and challenges for scholars seeking to promote financial reporting transparency in a changing global environment.
期刊介绍:
The Journal of Business Research aims to publish research that is rigorous, relevant, and potentially impactful. It examines a wide variety of business decision contexts, processes, and activities, developing insights that are meaningful for theory, practice, and/or society at large. The research is intended to generate meaningful debates in academia and practice, that are thought provoking and have the potential to make a difference to conceptual thinking and/or practice. The Journal is published for a broad range of stakeholders, including scholars, researchers, executives, and policy makers. It aids the application of its research to practical situations and theoretical findings to the reality of the business world as well as to society. The Journal is abstracted and indexed in several databases, including Social Sciences Citation Index, ANBAR, Current Contents, Management Contents, Management Literature in Brief, PsycINFO, Information Service, RePEc, Academic Journal Guide, ABI/Inform, INSPEC, etc.