شرکت چند ملیتی، یادگیری سازمانی، و واکنش بازار به سرمایه گذاری مشترک بین المللی: مدارک و شواهد از تایوان
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Global Finance Journal, Volume 13, Issue 2, 2002, Pages 181–194
This study examines the importance of corporate multinationalism and organizational learning in explaining the wealth effects of international joint ventures announcements in Taiwan. The evidence indicates that firms announcing international joint ventures into countries with no prior operational activity experience significantly favorable market response. In contrast, prior experience in international joint ventures does not explain the cross-sectional difference of announcement period abnormal returns. These findings remain the same even after controlling other explanatory variables. The evidence supports the positive multinational network hypothesis, but is inconsistent with organizational learning hypothesis.
Benefits of international corporate expansion have been well documented in the literature. Different from firms operating only in domestic markets, the primary advantage of multinational corporations lies in the flexibility to transfer resources across borders through a globally maximizing multinational network (Kogut, 1983). Through expanding the global network, the multinational corporation processes valuable options that allow them to take advantage of market imperfections. Specifically, multinational firms may reduce tax payment through intrafirm financial transaction. They are also provided the option to minimize manufacturing costs by shifting the production plants to countries with low material and labor costs Chen et al., 1991 and Doukas & Travlos, 1988. In addition, operating in a global network better protects multinational firms from local economic shocks due to international diversification. Finally, the multinational network extends the possibility to locate suitable partners for strategic alliances Chung et al., 1993, Doukas & Travlos, 1988, Gupta & Misra, 2000, Kogut, 1983 and Lewis, 1990. Those benefits are not possible for domestic firms. To the extent that values of multinationals cannot be acquired by investors, announcements of international expansion should increase shareholders' wealth to reflect the incremental value creation by expanding multinational network. International joint ventures have emerged as one of the most popular means of entering new markets. A typical joint venture involves two or more parent companies that represent partial combination of their resources under the original management. Despite the advantages of expanding multinational network through international joint ventures, previous studies on the wealth effects of international joint ventures have shown inconclusive results. Chen et al. (1991), Chen, Ho, Lee, and Yeo (2000), Crutchley, Guo, and Hansen (1991), and Lummer and McConnell (1990) find significantly positive abnormal returns for firms announcing international joint ventures. These studies also show that factors such as size of investment, free cash flow, and growth opportunity have significant explanatory power. In contrast, Finnerty, Owers, and Rogers (1986) document neutral market response to the announcements of international joint ventures. Chung et al. (1993) and Lee and Wyatt (1990) even report negative valuation effect associated with such announcements. Lee and Wyatt (1990) also find that only those international joint ventures with firms from less developed countries have nonnegative announcement effects, while Chung et al. find that markets tend to respond unfavorably to announcements of international joint ventures regardless of the economic status of the partner's home country. Previous research, however, mainly investigates the wealth effect of international joint ventures made by parent firms in the US. Little has been done for parent firms in the less developed or developing countries.1 The role of corporate multinationalism in explaining cross-sectional differences in market reactions to announcements of international joint ventures has been relatively less examined in the literature. Most of previous studies focus on the differential wealth effect of expanding into developed versus less developed countries, and find that US multinational firms expanding into developing countries receive significantly positive market reactions Chen et al., 1991, Chung et al., 1993, Gupta & Misra, 2000 and Lee & Wyatt, 1990. Doukas and Travlos (1988) provide an alternative test of corporate multinationalism on firm value. They investigate the wealth effect of international acquisition announcements, and find significant abnormal returns for shareholders of MNC not yet operating in the target firms' countries. In contrast, international acquisitions that do not expand firms' multinational network fail to change the market's perception about acquiring firms' ability to utilize benefits of multinationalism. The evidence supports the positive multinational network hypothesis, which predicts that expanding firms into a new geographic market would benefit shareholders' wealth. Errunze and Senbet (1984), Hirschey (1982) and Morck and Yeung (1991) document that international expansions create shareholders' wealth.2 To the extent that international joint venture provides access to new foreign markets, the market should respond favorably to the announcements of international joint ventures that expand firms' multinational network. Focusing on organizational learning hypothesis,3Gupta and Misra (2000) find that experience of ventures in the same foreign location as well as experience with international joint venture in general are significant variables in explaining cross-sectional difference in the announcement abnormal returns. They argue that due to the uncertainties inherent in international transactions and the potential conflicts between partners in joint ventures, past experience in locations, types, and partners of international joint ventures significantly contribute to the possibility of future success of similar activities, and thus, benefit shareholders wealth.4 Their study, however, failed to control for other important potential variables in explaining the differential cross-sectional wealth effect of international joint ventures. The purpose of this study is to examine the importance of corporate multinationalism and experiential learning in explaining the wealth effect of international joint ventures announcements. A sample of Taiwanese listed firms that announced international joint venture decisions during the period of 1988–1999 is investigated in this study. Taiwan is a small and open economy that heavily relies on international trade as the engine of sustained long-run economic growth. In recent years, international expansion has become a critical issue for corporations in Taiwan due to maturity of domestic markets and rising labor costs. International joint venture is among the most popular entry modes into foreign markets. Our study contributes to the literature by providing important evidence on the wealth effects of international joint ventures in a developing country as most of other studies focus mainly on US data. The results show that announcements of international joint ventures by Taiwanese firms are generally associated with positive abnormal returns. These results are similar to those found in the US by Chen et al. (1991), Crutchley et al. (1991), and Lummer and McConnell (1990) and in Singapore by Chen et al. (2000). The results also yield a strong support for the positive multinational network hypothesis. Announcements of international joint ventures by firms that first enter the venture's country are associated with significantly positive abnormal returns, whereas such announcements are insignificant by firms that have already operated in the venture's country. These results hold even after controlling for other variables that could influence the announcement returns of international joint ventures. Similar to those found in the literature of corporate multinationalism, this evidence suggests that the expansion of multinational network is an important consideration in accessing the wealth effect of international investment. We, however, did not find past general experience a significant factor influencing the wealth effect of international joint ventures as in Gupta and Misra (2000). The remainder of the paper is organized as follows. Sample selection and description are shown in Section 2. Section 3 presents the empirical results. The conclusion is in Section 4.
نتیجه گیری انگلیسی
This study examines the wealth effect of corporate multinationalism and experiential learning of international joint ventures announcements. The use of Taiwan data in this study provides important international evidence in developing countries and adds to our understanding of issues relevant in different business environments. Capital markets in countries on the Pacific Rim have attracted increasing attention from both practitioners and researchers. Taiwan is representative of one of the fastest-growing economies in this region. It attracts substantial investments from US, Japan, Germany, and other multinational firms. Thus, this study makes valuable contributions to the literature by providing useful insights into the determinants of the market response to announcements of international joint ventures by firms in high-growth economies. The empirical results indicate that announcements of international joint ventures by Taiwanese firms are, on average, associated with significantly positive abnormal returns. Firms announcing international joint ventures into countries with no prior operational activity experience are found to experience significantly favourable market response. Our findings, together with those on international acquisitions (Doukas & Travlos, 1988), suggest that expansion of multinational network is an important consideration in accessing the wealth effect of international corporate investment decisions. In contrast, prior experience in international joint ventures is insignificant in explaining the cross-sectional difference in abnormal returns associated with the announcements of international joint ventures. The evidence does not support Gupta and Misra (2000).