Multinationals and the Gains from International Diversification

Patrick F. Rowland and Linda Tesar ()
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Patrick F. Rowland: Fordham University

Review of Economic Dynamics, 2004, vol. 7, issue 4, 789-826

Abstract: This paper employs mean-variance spanning tests to examine the diversification potential of multinational firms and foreign market indices from the perspective of investors in the G7 countries over the 1984-95 period. We find evidence that multinational corporations may have provided diversification benefits for investors in Germany and the United States. We find that the addition of foreign market indices to a domestic portfolio - inclusive of multinationals - provided substantial diversification benefits in all countries. The economic importance of the shift of the portfolio frontier varied considerably across markets. (Copyright: Elsevier)

Keywords: Diversification; Spanning; Home Bias; Multinationals (search for similar items in EconPapers)
JEL-codes: F23 F36 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (59)

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Related works:
Working Paper: Multinationals and the Gains from International Diversification (1998)
Working Paper: Multinationals and the Gains from International Diversification (1998)
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DOI: 10.1016/j.red.2004.05.001

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