A general theory of corporate international investment under incomplete information, short sales and taxes

Mondher Bellalah, Marc Bradford and Detao Zhang

Economic Modelling, 2016, vol. 58, issue C, 615-626

Abstract: The theory of corporate international investment is extended to account for the effects of information costs, short sales and taxes on the management decision process. Our results explain how real exchange risk, competition and diversification gains affect corporate international investment decisions in this setting. The model includes clear forward looking explanations of some anomalies in the literature such as the ‘home bias puzzle’ in international finance.

Keywords: International investment; Information costs; Short sales and taxes; Management decision process (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:58:y:2016:i:c:p:615-626

DOI: 10.1016/j.econmod.2016.03.013

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