Kadish, Peter (2010): Are Large Multinational Companies Undervalued? Emerging Markets Perspective.
Download (841Kb) | Preview
The relationship between emerging economies and developed economies via multinational corporations is investigated. Using newly constructed database, it is shown that corporate expansion during the past decade has been dominated by M&As and characterized by developed countries financial institutions’ penetration into the emerging economies. European financial companies have experienced the fastest growth rates and together with US firms account for about 80% of the world’s largest enterprises. This expansion has resulted in cheap financing for small enterprises with local knowledge of the market in emerging economies that has resulted in their stocks’ outperformance since the beginning of the previous credit easing cycle (2001). As banking industry as a funding source is no longer available for small enterprises in emerging markets, this trend is expected to reverse. On the contrary, large multinational companies have access to cheap financing at home (where securitization markets are more developed) and internationally (economies of scale). This should allow large multinational enterprises to expand further in size by increasing their market share. Implications for the US economy are presented in Appendix.
|Item Type:||MPRA Paper|
|Original Title:||Are Large Multinational Companies Undervalued? Emerging Markets Perspective.|
|Keywords:||Multinational companies; M&A; FDI; Globalization|
|Subjects:||F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
F - International Economics > F0 - General > F01 - Global Outlook
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
|Depositing User:||Unnamed user with email firstname.lastname@example.org|
|Date Deposited:||11. Aug 2010 00:54|
|Last Modified:||12. Feb 2013 14:04|
Andrea Ferrero 2007; “The Long-Run Determinants of the U.S. External Imbalances” IMF Staff Report no. 295.
Bill B. Francis, Iftekhar Hasan, (2008), “Financial Market Integration and the Value of Global Diversification: Evidence for U.S. Acquirers in Cross-Border Mergers and Acquisitions”, Lally School of Management and Technology.
C.P Chandrasekhar (2008), “Global Liquidity and Financial Flows to Developing Countries: New trends in emerging markets and their implications”, G24 Working Paper.
Charles Engela, John H. Rogersb, 2006; “The U.S. current account deficit and the expected share of wrld output” , Departments of Economics and Finance, University of Wisconsin and NBER.
Carol C. Bertaut, Steven B. Kamin, and Charles P. Thomas 2008; “How Long Can the Unsustainable U.S. Current Account Deficit Be Sustained?” Board of Governors of the Federal Reserve System International Finance Discussion Papers.
Diego A. Comin, Norman Loayza, Farooq Pasha, and Luis Serven.“Medium Term Business Cycles in Developing Countries.” NBER Working Paper 2009.
John H. Dunning and Sarianna M. Lundan 2008 “Multinational Enterprises and the Global Economy, Second Edition”, The State University of New Jersey, Newark, USA, Research Institute of the Finnish Economy, Helsinki, Finland.
Jonathan Heathcote, Fibrizio Perri, Giovanni L. Violante, 2009; “Unequal westand: An empirical analysis of economic inequality in the US, 1967-2006.” National Bureau of Economic Research, Working Paper.
Gian Maria Milesi-Ferretti 2008; “Fundamentals at Odds? The U.S. Current Account Deficit and The Dollar” IMF Working Paper.
Maurice Obstfeld and Kenneth Rogoff 2005; “Global Current Account Imbalances and Exchange Rate Adjustments”; University of California, Berkeley, Harvard University.
Maurice Obstfeld and Kenneth Rogoff 2009 “Global Imbalances and the Financial Crisis: Products of Common Causes”,University of California, Berkeley, and Harvard University.
Mihir A. Desai, C. Fritz Foley(2008), “Domestic Effects of the Foreign Activities of U.S. Multinationals” Harvard University and NBER.
Niall Ferguson and Moritz Schularick (2007) C chimerica and global asset prices INTERNATIONAL FINANCE-OXFORD-, 2007.
Niall Ferguson and Moritz Schularick (2009); “The end of chimerical”, Harvard University.
Pierre-Olivier Gourinchas, H´el`ene Rey, 2005; ”From World Banker to World Venture Capitalist: US External Adjustment and The Exorbitant Privilege”; UC Berkeley, NBER and CEPR, Princeton, NBER and CEPR.
Philip R. Lane and Gian Maria Milesi-Ferretti, 2005; “A Global Perspective on External Positions”; IMF Working Paper.
Pierre-Olivier Gourinchas, H´el`ene Rey 2006, “International Financial Adjustment” Berkeley, CEPR and NBER Princeton, CEPR and NBER.
Ricardo Hausmann and Federico Sturzenegger 2006; “Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations”, Harvard university.
Steven Barnett and Ray Brooks (2010) “ China,Does Government Health and Education Spending Boost Consumption?”IMF Working Paper.
DB Global economic perspective (2010).