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Multinational Diversification and Corporate Performance: Evidence from European Firms
Author(s) -
Mathur Ike,
Singh Manohar,
Gleason Kimberly C.
Publication year - 2004
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1354-7798.2004.00258.x
Subject(s) - multinational corporation , diversification (marketing strategy) , business , industrial organization , empirical evidence , economies of scope , scope (computer science) , sample (material) , economies of scale , monetary economics , international economics , international trade , economics , finance , marketing , philosophy , chemistry , epistemology , chromatography , computer science , programming language
We investigate the empirical relationship between accounting based measures of performance and the degree of multinational diversification for a set of European chemical industry firms. We find that for these firms, the degree of multinational diversification is strongly related to superior financial performance. The results hold for each of the three sample years. The findings suggest that multinational firms outperform purely domestic and exporting firms. The results provide strong support for gains from multinational diversification. The results indicate that while greater European unification may have eroded potential benefits of exploiting international capital and product market imperfections, the benefits of firm specific economies of scope and scale as well as managerial and financial synergies are still realised through exports.