Internationalization and the Evolution of Corporate Valuation

By documenting the evolution of Tobin's q before, during, and after firms internationalize, the authors provide evidence on the bonding, segmentation, and market timing theories of internationalization. Using new data on 9,096 firms across 74 countries over the period 1989-2000, they find that...

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Main Authors:	Gozzi, Juan Carlos, Levine, Ross, Schmukler, Sergio L.
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ASSETS BONDS BOOK VALUE COMPANY CORPORATE GOVERNANCE CORPORATE VALUATIONS CORPORATION CORPORATIONS COST OF CAPITAL DEBT DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC MARKET DOMESTIC MARKETS EMERGING MARKETS EQUITY CAPITAL EXPANSION EXPROPRIATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FIRM SIZE FIRMS FOREIGN FIRMS GROWTH RATE HOME MARKETS INCOME TAXES INFLATION INTERNATIONAL FINANCE INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INTERNATIONAL MARKET INTERNATIONAL MARKETS INVESTMENT DECISIONS INVESTOR PROTECTION LATIN AMERICAN MARKET VALUE NASDAQ NYSE OFFERINGS OTC PRIVATE CAPITAL PRIVATE PLACEMENT PURCHASING REAL GDP SALES SMALL FIRMS STATEMENT STATEMENTS STOCK PRICES STOCKS VALUATION VOLATILITY
Online Access:	http://documents.worldbank.org/curated/en/2006/06/6822671/internationalization-evolution-corporate-valuation http://hdl.handle.net/10986/8431

id	okr-10986-8431
recordtype	oai_dc
spelling	okr-10986-84312021-04-23T14:02:40Z Internationalization and the Evolution of Corporate Valuation Gozzi, Juan Carlos Levine, Ross Schmukler, Sergio L. ASSETS BONDS BOOK VALUE COMPANY CORPORATE GOVERNANCE CORPORATE VALUATIONS CORPORATION CORPORATIONS COST OF CAPITAL DEBT DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC MARKET DOMESTIC MARKETS EMERGING MARKETS EQUITY CAPITAL EXPANSION EXPROPRIATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FIRM SIZE FIRMS FOREIGN FIRMS GROWTH RATE HOME MARKETS INCOME TAXES INFLATION INTERNATIONAL FINANCE INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INTERNATIONAL MARKET INTERNATIONAL MARKETS INVESTMENT DECISIONS INVESTOR PROTECTION LATIN AMERICAN MARKET VALUE NASDAQ NYSE OFFERINGS OTC PRIVATE CAPITAL PRIVATE PLACEMENT PURCHASING REAL GDP SALES SMALL FIRMS STATEMENT STATEMENTS STOCK PRICES STOCKS VALUATION VOLATILITY By documenting the evolution of Tobin's q before, during, and after firms internationalize, the authors provide evidence on the bonding, segmentation, and market timing theories of internationalization. Using new data on 9,096 firms across 74 countries over the period 1989-2000, they find that Tobin's q does not rise after internationalization, even relative to firms that do not internationalize. Instead, q rises significantly before internationalization and during the internationalization year. But then q falls sharply in the year after internationalization, quickly relinquishing the increases of the previous years. To account for these dynamics, the authors show that market capitalization rises before internationalization and remains high, while corporate assets increase during internationalization. The evidence supports models stressing that financial internationalization facilitates corporate expansion, but challenges models stressing that internationalization produces an enduring effect on q by bonding firms to a better corporate governance system. 2012-06-19T16:43:53Z 2012-06-19T16:43:53Z 2006-06 http://documents.worldbank.org/curated/en/2006/06/6822671/internationalization-evolution-corporate-valuation http://hdl.handle.net/10986/8431 English Policy Research Working Paper; No. 3933 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ASSETS BONDS BOOK VALUE COMPANY CORPORATE GOVERNANCE CORPORATE VALUATIONS CORPORATION CORPORATIONS COST OF CAPITAL DEBT DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC MARKET DOMESTIC MARKETS EMERGING MARKETS EQUITY CAPITAL EXPANSION EXPROPRIATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FIRM SIZE FIRMS FOREIGN FIRMS GROWTH RATE HOME MARKETS INCOME TAXES INFLATION INTERNATIONAL FINANCE INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INTERNATIONAL MARKET INTERNATIONAL MARKETS INVESTMENT DECISIONS INVESTOR PROTECTION LATIN AMERICAN MARKET VALUE NASDAQ NYSE OFFERINGS OTC PRIVATE CAPITAL PRIVATE PLACEMENT PURCHASING REAL GDP SALES SMALL FIRMS STATEMENT STATEMENTS STOCK PRICES STOCKS VALUATION VOLATILITY
spellingShingle	ASSETS BONDS BOOK VALUE COMPANY CORPORATE GOVERNANCE CORPORATE VALUATIONS CORPORATION CORPORATIONS COST OF CAPITAL DEBT DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC MARKET DOMESTIC MARKETS EMERGING MARKETS EQUITY CAPITAL EXPANSION EXPROPRIATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FIRM SIZE FIRMS FOREIGN FIRMS GROWTH RATE HOME MARKETS INCOME TAXES INFLATION INTERNATIONAL FINANCE INTERNATIONAL FIRMS INTERNATIONAL INVESTORS INTERNATIONAL MARKET INTERNATIONAL MARKETS INVESTMENT DECISIONS INVESTOR PROTECTION LATIN AMERICAN MARKET VALUE NASDAQ NYSE OFFERINGS OTC PRIVATE CAPITAL PRIVATE PLACEMENT PURCHASING REAL GDP SALES SMALL FIRMS STATEMENT STATEMENTS STOCK PRICES STOCKS VALUATION VOLATILITY Gozzi, Juan Carlos Levine, Ross Schmukler, Sergio L. Internationalization and the Evolution of Corporate Valuation
relation	Policy Research Working Paper; No. 3933
description	By documenting the evolution of Tobin's q before, during, and after firms internationalize, the authors provide evidence on the bonding, segmentation, and market timing theories of internationalization. Using new data on 9,096 firms across 74 countries over the period 1989-2000, they find that Tobin's q does not rise after internationalization, even relative to firms that do not internationalize. Instead, q rises significantly before internationalization and during the internationalization year. But then q falls sharply in the year after internationalization, quickly relinquishing the increases of the previous years. To account for these dynamics, the authors show that market capitalization rises before internationalization and remains high, while corporate assets increase during internationalization. The evidence supports models stressing that financial internationalization facilitates corporate expansion, but challenges models stressing that internationalization produces an enduring effect on q by bonding firms to a better corporate governance system.
format	Publications & Research :: Policy Research Working Paper
author	Gozzi, Juan Carlos Levine, Ross Schmukler, Sergio L.
author_facet	Gozzi, Juan Carlos Levine, Ross Schmukler, Sergio L.
author_sort	Gozzi, Juan Carlos
title	Internationalization and the Evolution of Corporate Valuation
title_short	Internationalization and the Evolution of Corporate Valuation
title_full	Internationalization and the Evolution of Corporate Valuation
title_fullStr	Internationalization and the Evolution of Corporate Valuation
title_full_unstemmed	Internationalization and the Evolution of Corporate Valuation
title_sort	internationalization and the evolution of corporate valuation
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/06/6822671/internationalization-evolution-corporate-valuation http://hdl.handle.net/10986/8431
_version_	1764406263073996800

Internationalization and the Evolution of Corporate Valuation

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