Who is afraid of political risk? Multinational firms and their choice of capital structure

Arbeitspapier

This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such as expropriation, unreliable intellectual property rights and confiscatory taxation. In our theoretical analysis we find that, as political risk increases, the ownership share tends to decrease, whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Discussion Paper Series 1 ; No. 2009,02

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; International Investment; Long-term Capital Movements ; Multinational Firms; International Business
• Thema: Multinational firms ; political risk ; capital structure ; leverage ; ownership structure ; foreign affiliates ; Multinationales Unternehmen ; Auslandsniederlassung ; Kapitalstruktur ; Politische Stabilität ; Korruption ; Enteignung ; Übernahme ; Deutschland

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kesternich, Iris ; Schnitzer, Monika
• Ereignis: Veröffentlichung
• (wer): Deutsche Bundesbank
• (wo): Frankfurt a. M.
• (wann): 2009

Weitere Informationen

• Handle: http://hdl.handle.net/10419/27656
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ