top of page

International Business Activity and Firm Value: The Impact of Ownership and Capital Structure

Steen Thomsen

Article

Theoretically, the effect of international business activity on firm value depends on ownership and capital structure. Companies may over-invest in international business activity because of agency problems or under-invest, if they are capital-rationed. This paper examines how these competing hypotheses fit a sample of 237 very large European and US companies over the period 1991-1997. The results indicate that internationalization may sometimes destroy value from a shareholder viewpoint and that financial leverage may have a negative effect on value creation by internationalization whereas the effects of ownership concentration on value gains from internationalization were found to depend on system effects. However, the magnitude of the effects is small, and the results were found to be sensitive to estimation methods.

Keywords

Round Building

Article

©2024 by Journal of International Business and Economy (JIBE). All rights reserved.

7th Floor, Finland Tower, 203, Sinchon-ro, Seodaemun-gu, Seoul, Republic of Korea. Email: jibe.ed@gmail.com

bottom of page