Tech Report Number
1996-009
Abstract
Recent studies have examined the determinants of international joint venture (IJV) formations and stock market reactions to such investments. Less is known, however, about the evolution of IJVs and the attendant performance implications for parent firms. This paper examines one specific type of IJV evolution, IJB internalization, whereby one firm acquires the IJV by buying out its partner(s). Standard agency theory variables are hypothesized toinfluence parent firm valuation effects. The results indicate that parent firm valuation effects are positively related to the parent firm equity owned by insiders and the interaction of debt financing and free cash flow.
Date of this Version
1-1-1996
COinS