International corporate diversification and performance: Does firm self-selection matter&quest

Protiti Dastidar
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Protiti Dastidar: George Washington University, School of Business, Washington, USA

Journal of International Business Studies, 2009, vol. 40, issue 1, 85 pages

Abstract: This paper presents new evidence on US multinational firms and shows that the decision to diversify internationally is endogenous, and depends on firm, industry, and home-country characteristics. US multinational firms are a self-selected sample, and firms that are more likely to diversify internationally have lower firm values. Contrary to the global diversification discount literature, multinational firms are valued at a premium after controlling for the endogeneity of the global diversification (foreign direct investment-FDI) decision. These results parallel the industrial diversification literature and underline the importance of controlling for endogeneity when examining the impact of international diversification on firm value. Journal of International Business Studies (2009) 40, 71–85. doi:10.1057/palgrave.jibs.2008.57

Date: 2009
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