Business in Troubled Waters: Does Adverse Attitude Affect Firm Value?
40 Pages Posted: 19 May 2013
Date Written: May 18, 2013
This paper investigates the relationship between US MNCs’ valuations and anti-Americanism in countries where MNCs’ foreign subsidiaries are located. We find that MNCs suffer value-destruction when they enter markets where people express severe anti-Americanism. However, we uncover that geographic diversification into these high anti-Americanism countries significantly increases firm value if the MNC has high levels of intangibles such as technological know-how and marketing expertise. Our findings are consistent with the notion that the advantages from internalizing the cross-border transfer of intangibles are greater when barriers to competition are higher.
Keywords: Global Attitudes, Intangible Assets, Internalization, Multinational Corporation, Geographic Diversification
JEL Classification: F50, F23, G30
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