Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94181
Authors: 
Kesternich, Iris
Schnitzer, Monika
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 213
Abstract: 
This paper investigates how multinational firms choose their capital structure in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, like expropriation, corruption and confiscatory taxation, and In our theoretical analysis we find that as political risk increases the ownership share always decreases whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects.
Subjects: 
multinational Terms
political risk
capital structure
leverage
ownership structure
JEL: 
F23
F21
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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