THE CHANGING RISK PROFILE OF U.S.‐BASED MULTINATIONAL CORPORATIONS EXPOSED TO EUROPEAN COMMUNITY MARKETS

Karen Chambliss, Jeff Madura and Francis W. Wright

Journal of Financial Research, 1994, vol. 17, issue 1, 133-146

Abstract: In this study we investigate the risk characteristics of U.S.‐based multinational corporations (MNCs) that conduct much of their business in the European Community. Specifically, we assess the efficacy of a multifactor return‐generating model that incorporates the influence of U.S. and European markets. Our results demonstrate that the European market is a significant factor in explaining the time‐series behavior of MNC returns, and that the European market influence is stronger since the adoption of the Single European Act. In addition, the reduction in the sensitivity of MNCs to the U.S. market since the Single European Act is cross‐sectionally associated with changes in their proportional levels of European sales. The results suggest that the returns of other MNCs expanding into increasingly integrated regional blocs may experience similar changes in their systematic risk profile.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/j.1475-6803.1994.tb00179.x

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:bla:jfnres:v:17:y:1994:i:1:p:133-146

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0270-2592

Access Statistics for this article

Journal of Financial Research is currently edited by Jayant Kale and Gerald Gay

More articles in Journal of Financial Research from Southern Finance Association Contact information at EDIRC., Southwestern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().