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Christian-Albrechts-Universität Kiel (CAU) >
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Economics Working Papers, Department of Economics, CAU Kiel >
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http://hdl.handle.net/10419/22034
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| Title: | | Whole versus Shared Ownership of Foreign Affiliates  |
| Authors: | | Stähler, Frank Ryan, Michael Raff, Horst |
| Issue Date: | | 2007 |
| Series/Report no.: | | Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2007,18 |
| 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 ownership joint venture productivity |
| JEL: | | L20 F23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economics Working Papers, Department of Economics, CAU Kiel
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