Do Foreign Owners Favor Short-Term Profit? Evidence from Germany

Verena Dill, Uwe Jirjahn and Stephen Smith

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: Comparing domestic- and foreign-owned firms in Germany, this paper finds that foreign-owned firms are more likely to focus on short-term profit. This influence is particularly strong if the local managers of the German subsidiary are not sent from the foreign parent company. Moreover, the physical distance between the foreign parent company and its German subsidiary increases the probability of focusing on short-term profit. These findings conform to the hypothesis that foreign owners facing an information disadvantage concerning the local conditions of their subsidiaries are more likely to favor short-term profit. However, we do not identify differences in "short-termism" between investors from "Anglo-Saxon" and other foreign countries; rather, results point in the direciton of more general features of international business investment.

Keywords: Foreign Ownership; Short-Termism; Asymmetric Information; Globalization (search for similar items in EconPapers)
JEL-codes: F23 G34 M16 P10 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.gwu.edu/~iiep/assets/docs/papers/SmithIIEPWP201315.pdf (application/pdf)

Related works:
Journal Article: Do foreign owners favour short-term profit? Evidence from Germany (2016)
Working Paper: Do Foreign Owners Favor Short-Term Profit? Evidence from Germany (2014)
Working Paper: Do Foreign Owners Favor Short-Term Profit? Evidence from Germany (2013)
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:gwi:wpaper:2013-15

Access Statistics for this paper

More papers in Working Papers from The George Washington University, Institute for International Economic Policy Contact information at EDIRC.
Bibliographic data for series maintained by Kyle Renner ().