Entry mode and firm value: Evidence from investing firms in mainland China

Hsueh-Tien Lu and Edmund C. Keung

Pacific-Basin Finance Journal, 2019, vol. 58, issue C

Abstract: We examine whether forming a joint venture creates more or less value relative to establishing a wholly owned subsidiary. Using a unique dataset of 1567 Taiwanese listed firms (19,090 firm-years) from 2000 to 2016, we find geographical diversification to mainland China results in valuation discounts, which is attributed to overall investments, wholly owned subsidiaries, and joint ventures. Further, we provide evidence that firms forming joint ventures generate less firm value than firms creating wholly owned subsidiaries in mainland China. This finding could be a potential explanation for why Taiwanese listed firms are increasingly choosing the wholly owned subsidiary mode to invest in firms in mainland China.

Keywords: Foreign entry mode; Foreign direct investment; Firm value (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X19301404
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:58:y:2019:i:c:s0927538x19301404

DOI: 10.1016/j.pacfin.2019.101208

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().