Multinational Diversification and Performance: A Reevaluation of the Evidence

17 Pages Posted: 8 Aug 2012 Last revised: 25 Sep 2012

See all articles by Philip H. Siegel

Philip H. Siegel

Florida Atlantic University

Carl R. Borgia

affiliation not provided to SSRN

Jeffrey Lessard

Rochester Institute of Technology (RIT)

Khondkar E. Karim

University of Massachusetts Lowell

Date Written: August 7, 2012

Abstract

The purpose of this research is to re-examine the benefits (if any) that could apply to US based corporations through increased international investment.

Design, Methodology, Approach: Expanding upon prior studies, firms with foreign operations are segmented by three different schemes: the percentage of foreign tax liability to total tax liability; the percentage of foreign sales to total sales, and the percentage of foreign assets to total assets. We evaluate whether the degree of foreign participation affects the risk-return profile of the firms by categorizing firms with foreign participation into quintiles.

Findings: The research indicates significant differences exist between domestic firms and multinational firms. The extent of multinational diversification does not provide incremental economic benefit. The advantages enjoyed by multinational corporations appear to have disappeared over time due to an increasing integration of the global economy.

Originality/Value: The study suggests that the extent of multinational diversification does not provide incremental economic benefit. The advantages enjoyed by multinational corporations appear to have disappeared over time due to an increasing integration of the global economy.

Keywords: multinational corporate performance, international risk and return

JEL Classification: E39, F23, G15, M49, N20

Suggested Citation

Siegel, Philip H. and Borgia, Carl R. and Lessard, Jeffrey and Karim, Khondkar E., Multinational Diversification and Performance: A Reevaluation of the Evidence (August 7, 2012). Available at SSRN: https://ssrn.com/abstract=2126268 or http://dx.doi.org/10.2139/ssrn.2126268

Philip H. Siegel (Contact Author)

Florida Atlantic University ( email )

John MacArthur Campus
Jupiter, FL 33458
United States
5612000134 (Phone)

Carl R. Borgia

affiliation not provided to SSRN ( email )

Jeffrey Lessard

Rochester Institute of Technology (RIT) ( email )

Rochester, NY 14623
United States

Khondkar E. Karim

University of Massachusetts Lowell ( email )

1 University Ave
Lowell, MA 01854
United States

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