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Equity valuation effects of foreign capital expenditures : the role of property rights


English II, Philip C. and Moore, William T. (2003) Equity valuation effects of foreign capital expenditures : the role of property rights. The International Journal of Banking and Finance , 1 (1). pp. 1-21. ISSN 1617-722

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Abstract

We examine common stock price reactions to offshore capital expenditures undertaken by U. S. multinational firms. Arguments based on optionality and expropriability lead to predicted price reactions conditioned on the degree of ambiguity in property rights enforcement in the host country. Our findings based on 159 foreign investment decisions reveal a significant influence of property rights ambiguity on the valuation effect. For investment in countries where property rights are enforced as reliably as in the U.S., firms experience and average increase in equity value of $41.83 million, or $1.614 per dollar invested.

Item Type: Article
Uncontrolled Keywords: stock price, offshore capital expenditures, multinational firms
Subjects: H Social Sciences > HG Finance
Divisions: UNSPECIFIED
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 28 Jul 2010 11:10
Last Modified: 01 Aug 2010 00:26
URI: http://repo.uum.edu.my/id/eprint/327

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