Journal of Multinational Financial Management最新文献

Employing a large sample of 13,449 firms across 40 countries, we find that firms with high media coverage tend to take risky investments. We further show that this positive relation is achieved through three plausible channels, namely, the information asymmetry channel, the capital-at-risk channel, and the business strategy channel, and is enhanced in countries with strong shareholder protection and transparent information environments. Multinational analyses show that news coverage has a larger positive impact on firms with higher levels of international diversification. Domestic media and domestic institutional investors are found to enhance the positive role of media. Our main conclusions remain valid after carefully taking endogeneity issues into account and conducting various robustness tests. This study sheds new light on the real effects of media in mitigating risk-related agency conflicts.

While a number of studies have examined ownership structure across countries, the literature has not yet reached a consensus as to how and why ownership concentration and the size sensitivity of ownership concentration vary across countries. Using a sample of 18,932 firms across 40 countries, we find that there is a negative relationship between firm size and ownership concentration and thus lower ownership concentration in countries with a high quality of governance. Meanwhile, in countries with weak governance, ownership concentration persists even as firms get larger. Our findings support the theory that a firm’s choice of optimal ownership structure depends on its quality of governance, which includes both vertical and horizontal governance. Our study also finds that civic capital, including ethical values, contribute to the variation of ownership structure across countries. The findings also potentially reconcile the currently conflicting empirical results in studies of ownership concentration around the world.

We analyze the impact of private equity (PE) investments (both venture-backed and buyout deals) on export performance in a cross-country setting. Using a comprehensive database of 22 OECD countries and 12 aggregated industries, we find that PE has a positive effect on export density and export market share. We confirm this finding after controlling for potential endogeneity issues using an IV framework. This impact is deeper in industries with higher productivity, value-added, and infrastructure availability. The outcomes are similar when local and foreign PE activity are considered, although foreign PE activity shows greater capacity to generate exports in the host country. Moreover, foreign PE activity enhances the capability of local PEs to generate additional exports, showing a complementary effect. Finally, country-specific characteristics such as trade freedom and institutional quality have a greater impact in generating exports when PE activity is higher. Our results have policy implications regarding access to foreign VC and PE investment in emerging economies.

This study examines the impact of income diversification and corruption on banks’ performance. In particular, we focus on the impact of the extent of corruption in a country on the relationship between banks’ income diversification and performance. We utilize annual data on 715 banks from 52 countries in Africa over a period of eight years, 2011–2018. The results reveal that income diversification enhances banks' profit and risk-adjusted profit. On the other hand, corruption significantly reduces bank performance. We find that the positive impact of income diversification on performance is undermined in countries with a high level of corruption. We also examine the effect of corruption on the diversification–performance nexus across bank ownership groups using subsamples of local, regional African, and non-African banks. We find that corruption affects especially the operation of local and regional African banks, and affects less the operation of non-African banks. Our findings have essential implications for the regulation of banks and financial stability in general in African countries.

This study examines the prediction power of market liquidity (the ease with which asset are traded) and funding liquidity (the ease with which traders can obtain funding) on the price volatilities of Bitcoin. We find that both market and funding liquidity shocks forecast future volatility. More importantly, liquidity shocks have a stronger and persistent effect on the long-term trend component of volatility. Exploiting the predictability of liquidity shocks, we propose a risk-managed strategy to manage extremely high volatility and avoid occasional large crashes in cryptocurrency markets. This novel strategy virtually eliminates crashes and improves the Sharpe ratio substantially against the benchmark buy-and-hold strategy. The outperformance is much stronger during the turbulent periods of cryptocurrencies. Hence, this paper provides important insights into cryptocurrency investment and portfolio management combining traditional assets and cryptocurrencies.

This paper provides evidence on the role of foreign analysts in improving the informativeness of stock prices for corporate managers. Using a large sample of 15,623 firms in 42 economies, we find that foreign analysts improve managerial learning from stock markets as measured in terms of investment-to-price sensitivity. Consistent with the flow of information from global firms to local firms, we directly find that foreign analysts reduces firms’ price delay to global market information. We also dismiss the concern that Tobin's Q captures no additional information that is reflected only in the stock price. Cross-sectional analyses indicate that the positive effect of foreign analysts on managerial learning is more pronounced for firms in developed economies, firms with better financial positions, firms in less competitive industries, and firms with less foreign ownership. Our findings provide cross-country evidence on the informative role of foreign analysts for managers, which in turn strengthens the real effect of financial markets.

Stewardship encourages institutional investors to perform a monitoring function through cooperation and collective action. The United Kingdom was the first country to publish a Stewardship Code. This motivates us to investigate the monitoring role of institutional investors in the UK. We find that institutional ownership has a positive influence on firms' one-year future valuation and quality of corporate governance practices. The positive relationship identified is mainly driven by independent and long-term (ILT) institutional ownership. We additionally demonstrate that acquirers with higher ILT institutional ownership make better acquisition decisions. The performance of cross-border acquisitions does not differ from the performance of domestic deals. Overall, our results are consistent with the view that ILT institutional investors contribute to firm monitoring and promoting sound corporate governance practices, which can be attributed to their long-term investment horizons and arm’s-length relationships with investee companies.

Employing an international sample from 25 economies, we investigate the relationship between firm-level scale inflexibility and corporate innovation. The baseline result shows that inflexibility is positively associated with innovation activities. In the mechanism analyses, we find that the positive relationship is mainly driven by firms with higher contraction inflexibility and in less stable external environments. The positive relationship is also stronger for firms in industries with higher concentration, and in economies with stronger creditor rights. Finally, we observe a weaker relationship in multinational enterprises. Collectively, our findings suggest that scale inflexibility creates a stable environment for corporate innovation.

This paper examines the effects of negative screening on the financial performance of sovereign wealth funds (SWFs). SWFs have been under pressure to invest responsibly and divest from fossil fuel firms by their respective governments and citizens. Yet, such a strategy may reduce the financial performance of these funds. This study examines the extent to which excluding fossil fuel firms from SWF portfolios in order to comply with ethical standards reduces their financial performance. By using asset pricing models, namely the capital asset pricing model and the Carhart four-factor model, we find that excluding firms has a statistically insignificant impact on the financial performance of SWFs. We document similar results regarding the performance of SWF fossil fuel portfolios, suggesting that fossil fuel divestment will not impact SWF performance. We also test for differences between “extraction and production” and “refining and integrated” fossil fuel firms to explain why some SWFs divest only from extraction and production firms. Our findings indicate that, to some extent, extraction and production companies generate lower returns. We conclude that socially responsible investment, by negative screening of fossil fuel firms does not reduce SWF performance.

This paper investigates the flight to advanced economies by foreign investors at the onset of the COVID pandemic. Amid an overall decline of international positions, countries featuring higher GDPs per capita, and belonging to the groups of advanced, G7, or euro area countries, appear to have been significantly less severely hit by the pandemic than developing countries. Comparing the growth rates of foreign liabilities in the first quarter of 2020, the wedge between advanced and emerging countries is about 3%, and it is at least twice as large for G7 countries. This wedge is paired with evidence of momentum trading by foreign investors. Our results are robust to the inclusion, as controls, of government stringency measures, alternative indicators of the severity of the pandemic, and alternative sample specification and regression methods.