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- Publisher Website: 10.1007/s41685-018-0101-5
- Scopus: eid_2-s2.0-85100601282
- WOS: WOS:000681270600006
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Article: Market Transparency and International Allocation of Capital
Title | Market Transparency and International Allocation of Capital |
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Authors | |
Keywords | International capital allocation Country risk Public information Transparency |
Issue Date | 2019 |
Publisher | Springer. The Journal's web site is located at http://www.springer.com/economics/regional+science/journal/41685 |
Citation | Asia-Pacific Journal of Regional Science, 2019, v. 3 n. 2, p. 421-429 How to Cite? |
Abstract | The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency. |
Persistent Identifier | http://hdl.handle.net/10722/272093 |
ISSN | 2023 Impact Factor: 1.9 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Broll, U | - |
dc.contributor.author | Eckwert, B | - |
dc.contributor.author | Wong, KKP | - |
dc.date.accessioned | 2019-07-20T10:35:32Z | - |
dc.date.available | 2019-07-20T10:35:32Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | Asia-Pacific Journal of Regional Science, 2019, v. 3 n. 2, p. 421-429 | - |
dc.identifier.issn | 2509-7946 | - |
dc.identifier.uri | http://hdl.handle.net/10722/272093 | - |
dc.description.abstract | The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency. | - |
dc.language | eng | - |
dc.publisher | Springer. The Journal's web site is located at http://www.springer.com/economics/regional+science/journal/41685 | - |
dc.relation.ispartof | Asia-Pacific Journal of Regional Science | - |
dc.subject | International capital allocation | - |
dc.subject | Country risk | - |
dc.subject | Public information | - |
dc.subject | Transparency | - |
dc.title | Market Transparency and International Allocation of Capital | - |
dc.type | Article | - |
dc.identifier.email | Wong, KKP: kpwongc@hkucc.hku.hk | - |
dc.identifier.authority | Wong, KKP=rp01112 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1007/s41685-018-0101-5 | - |
dc.identifier.scopus | eid_2-s2.0-85100601282 | - |
dc.identifier.hkuros | 298681 | - |
dc.identifier.volume | 3 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 421 | - |
dc.identifier.epage | 429 | - |
dc.identifier.isi | WOS:000681270600006 | - |
dc.publisher.place | Singapore | - |
dc.identifier.issnl | 2509-7954 | - |