Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288996 
Year of Publication: 
2020
Citation: 
[Journal:] The Review of International Organizations [ISSN:] 1559-744X [Volume:] 16 [Issue:] 4 [Publisher:] Springer US [Place:] New York, NY [Year:] 2020 [Pages:] 755-791
Publisher: 
Springer US, New York, NY
Abstract: 
We examine the global ownership structure of firms in the context of the investment regime. Investment agreements extend valuable privileges to firms invested abroad. But, these privileges only apply to firms whose assets are owned in a country that has signed an agreement with their host market; firms lack protections under investment agreements for many of their target markets. We argue that, by strategically locating subsidiaries in ‘transit’ countries, firms systematically expand their access to investment agreements. This firm-specific access to investment agreements through transit countries also has implications for investment flows: Transit countries receive more inflows and outflows of investment. Moreover, the impact of agreements declines over time and treaty partners, as seemingly newly protected firms have previously gained coverage through subsidiaries. Drawing on subsidiary location choices of the world’s largest firms, as well as data on firm ownership structures and aggregate investment flows, we present systematic evidence consistent with this argument. The paper highlights the importance of the global ownership structure of firms in an environment of heterogeneous international rules and discusses new distributional consequences of the investment regime.
Subjects: 
Bilateral investment treaty
Foreign direct investment
Ownership structure
Investor-state dispute settlement
MNCs
Regulatory chill
JEL: 
F21
F53
F59
K33
L22
M16
O19
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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