Open AccessThe Relationship Of Development Status Of Investee Countries And Investor Perceptions Of Foreign Earnings
Author(s) -
ChenLung Chin,
Yu-Ju Chen,
Gary Kleinman,
Picheng Lee
Publication year - 2012
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v11i7.7065
Subject(s) - internationalization , earnings , business , sample (material) , value (mathematics) , relevance (law) , international economics , developing country , monetary economics , economics , accounting , international trade , economic growth , chemistry , chromatography , machine learning , computer science , political science , law
This study investigates the impact of corporate internationalization and the development status of investee countries on the foreign earnings response coefficient (FERC), which is a measure of the value-relevance of foreign earnings. To improve competitiveness, firms worldwide have expanded aggressively into foreign markets, thereby increasing their exposure to external risks and uncertainties on the one hand, and sources of growth and reward on the other. Using a Taiwanese sample, we found that greater corporate internationalization via investments in developed countries was positively related to the foreign ERC. We expected, and found, that companies can enhance the positive effects of internationalization by investing in countries that are relatively better developed than in countries that are less well developed. The public policy implications of these findings are discussed.