Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/99003
Authors: 
Dill, Verena
Jirjahn, Uwe
Smith, Stephen C.
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8165
Abstract: 
Comparing domestic- and foreign-owned firms in Germany, this paper finds that foreign-owned firms are more likely to focus on short-term profit. This influence is particularly strong if the local managers of the German subsidiary are not sent from the foreign parent company. Moreover, the physical distance between the foreign parent company and its German subsidiary increases the probability of focusing on short-term profit. These findings conform to the hypothesis that foreign owners facing an information disadvantage concerning the local conditions of their subsidiaries are more likely to favor short-term profit. However, we do not identify differences in "short-termism" between investors from "Anglo-Saxon" and other foreign countries; rather, results point in the direction of more general features of corporate globalization.
Subjects: 
foreign ownership
short-termism
asymmetric information
globalization
multinational enterprises
stakeholders
JEL: 
F23
G34
M16
P10
Document Type: 
Working Paper

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