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Title:Whole versus Shared Ownership of Foreign Affiliates PDF Logo
Authors:Raff, Horst
Ryan, Michael
Stähler, Frank
Issue Date:2008
Series/Report no.:Kieler Arbeitspapiere 1433
Abstract:This paper studies why multinational firms often share ownership of a foreign affiliate with a local partner even in the absence of government restrictions on ownership. We show that shared ownership may arise, if (i) the partner owns assets that are potentially important for the investment project, and (ii) the value of these assets is private information. In this context shared ownership acts as a screening device. Our model predicts that the multinational?s ownership share is increasing in its productivity, with the most productive multinationals choosing not to rely on a foreign partner at all. This prediction is shown to be consistent with data on the ownership choices of Japanese multinationals.
Subjects:Foreign direct investment
multinational enterprise
joint venture
productivity
JEL:L20
F23
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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