{"title":"The effect of international diversification on investment efficiency","authors":"Alireza Askarzadeh , Kenneth Yung , Fatemeh Askarzadeh","doi":"10.1016/j.ribaf.2024.102641","DOIUrl":null,"url":null,"abstract":"<div><div>Although internationalization research has proliferated recently, scant attention has been devoted to understanding why international expansion decreases firm value. By applying the concepts of transaction cost economics and agency theory, we propose that the impact of internationalization on investment efficiency—a critical determinant of international strategy success—is significant. Internationalization often exacerbates information asymmetry and complicates effective monitoring leading to diminished investment efficiency. Moreover, this relationship is moderated by international experience, the intensity of industry competition, and the stage of the firm's lifecycle. An Ordinary Least Squares regression analysis of a US sample with 49,168 firm-year observations between 1989 and 2022 supports our predictions. This study not only advances internationalization theories but also provides a fresh perspective on the performance implications of international expansion, underscoring the organizational and industrial conditions that influence the success of internationalization efforts.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"73 ","pages":"Article 102641"},"PeriodicalIF":6.3000,"publicationDate":"2024-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in International Business and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0275531924004343","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Although internationalization research has proliferated recently, scant attention has been devoted to understanding why international expansion decreases firm value. By applying the concepts of transaction cost economics and agency theory, we propose that the impact of internationalization on investment efficiency—a critical determinant of international strategy success—is significant. Internationalization often exacerbates information asymmetry and complicates effective monitoring leading to diminished investment efficiency. Moreover, this relationship is moderated by international experience, the intensity of industry competition, and the stage of the firm's lifecycle. An Ordinary Least Squares regression analysis of a US sample with 49,168 firm-year observations between 1989 and 2022 supports our predictions. This study not only advances internationalization theories but also provides a fresh perspective on the performance implications of international expansion, underscoring the organizational and industrial conditions that influence the success of internationalization efforts.
期刊介绍：
Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance
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