search query: @indexterm capital structure of companies / total: 353
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| Author: | Desai, M.A. Foley, C.F. Hines, J.R. Jr. |
| Title: | Capital structure with risky foreign investment |
| Journal: | Journal of Financial Economics
2008 : JUN, VOL. 88:3, p. 534-553 |
| Index terms: | multinational companies capital structure of companies foreign investment political risks |
| Language: | eng |
| Abstract: | Companies facing significant business risks have incentives to reduce the costs of these risks through adjustment of their capital structures. This paper examines this link by analyzing the exposures of multinational firms (MNCs) to political (here as: pol.) risk. It is indicated that returns on investment in politically risky countries are more volatile than returns elsewhere. MNCs reduce their leverage in response to these pol. risks. The effect of foreign pol. risks on leverage is most on view for firms in industries with returns most vulnerable to pol. influence. |
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