Hysteresis in adjusting the ownership structure of foreign subsidiaries

Kostas Axarloglou and Panos Kouvelis

International Business Review, 2007, vol. 16, issue 4, 494-506

Abstract: In this paper we study the insight that multinational companies might delay the adjustment of the ownership structure of their foreign subsidiaries despite the fact that the fundamentals call for an immediate adjustment (hysteresis). Based on company-level data, we empirically investigate the company and industry conditions that influence the strength of the hysteresis in adjusting this ownership structure. Exchange rate volatility and adjustment cost strengthen the hysteresis in ownership adjustment decisions, while the growth of sales in the foreign market weakens it.

Keywords: Foreign; direct; investment; Ownership; adjustments (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (8)

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