Internationalization and Firm Risks
Internationalization and Firm Risk: An Upstream-Downstream Hypothesis Author(s): Chuck C. Y. Kwok and David M. Reeb Reviewed work(s): Source: Journal of International Business Studies, Vol. 31, No. 4 (4th Qtr., 2000), pp. 611-629 Published by: Palgrave Macmillan Journals Stable URL: http://www.jstor.org/stable/155664 . Accessed: 20/01/2013 05:04
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Internationalization Firm and
Risk:
An
Upstreamr-Downstream Hypothesis
Chuck C. Y. Kwok*
UNIVERSITY OF SOUTH CAROLINA
David M. Reeb**
AMERICAN UNIVERSITY
Corporate international diversification theory posits that multinational corporations (MNCs) should have lower risk and higherfinancial leverage than purely domestic corporations (DCs). We suggest an alternative upstream-downstreamhy-
pothesis according to which the overall effect of internationalization on the risk and leverage of MNCs is expected to vary with home and target market conditions. The empirical results are consistent with the suggested hypothesis. porations (DCs) (e.g. Lee and Kwok, 1988). An implication of this body of research is that firm risk is increasing in corporate internationalization. Owing to data availability, the research on the financial aspects of
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp
.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
.
Palgrave Macmillan Journals is collaborating with JSTOR to digitize, preserve and extend access to Journal of International Business Studies.
http://www.jstor.org
This content downloaded on Sun, 20 Jan 2013 05:04:54 AM All use subject to JSTOR Terms and Conditions
Internationalization Firm and
Risk:
An
Upstreamr-Downstream Hypothesis
Chuck C. Y. Kwok*
UNIVERSITY OF SOUTH CAROLINA
David M. Reeb**
AMERICAN UNIVERSITY
Corporate international diversification theory posits that multinational corporations (MNCs) should have lower risk and higherfinancial leverage than purely domestic corporations (DCs). We suggest an alternative upstream-downstreamhy-
pothesis according to which the overall effect of internationalization on the risk and leverage of MNCs is expected to vary with home and target market conditions. The empirical results are consistent with the suggested hypothesis. porations (DCs) (e.g. Lee and Kwok, 1988). An implication of this body of research is that firm risk is increasing in corporate internationalization. Owing to data availability, the research on the financial aspects of
References: Agmon, Tamir and Donald Lessard, 1977. Investor recognition of corporate JOURNAL OF INTERNATIONAL BUSINESS STUDIES VOL. 31, No. 4, FOURTH QUARTER, 2000 629