Aabo, Tom5; Pantzalis, Christos3; Park, Jung Chul4
1 Department of Economics and Business Economics, Aarhus BSS, Aarhus University2 Department of Economics and Business Economics - The Tuborg Research Centre for Globalisation and Firms, Department of Economics and Business Economics, Aarhus BSS, Aarhus University3 University of South Florida4 Auburn University5 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
We investigate whether and how multinationality affects the opaqueness of the firm. We use multiple alternative measurements of multinationality and opaqueness. Spanning nearly three decades for a large sample of US non-financial firms, we find a statistically and economically significant, positive relationship between multinationality and opaqueness. We find that this positive relationship hinges on whether or not the degree of foreign involvement is compatible with the structure of the firm's foreign operations network. Our results imply that multinationality's impact on opaqueness is alleviated when there is harmony between the size of foreign involvement and the extent of the MNC network's geographic dispersion. Previous literature has implicitly assumed a simple, positive relationship. This is the first study to explicitly address the question in a comprehensive manner.
Journal of Corporate Finance, 2015, Vol 30, p. 65-84