Empirical Evidence from Multinational Corporations
Appendix A: Prior Research
Empirical research related to foreign investment evaluations Author(s) Sam- ple/Response rate Aim of the research / research question Main results Oblak/Helm (1980) 226 U.S. corpora- tions of the For- tune 500 Index 58 (26%) This paper investi- gates the capital budgeting methods that large U.S. MNCs use, as well as their procedures to estimate project re- turns, risk, and the required rate of re- turn for foreign in- vestment projects. The results of the survey indi- cate that MNC are conducting more detailed analysis of their foreign projects. Compared to earlier results in 1966, they found that higher percentage of MNC use DCF methods and adjust for risk in foreign direct investments. Kelly/ Philippatos (1982) 255 U.S. manu- facturing MNC of the Fortune 500 Index 136 (54%) The paper investi- gates the foreign investment valua- tions practices em- ployed by large U.S. based multinational manufacturing com- panies. IRR is the most common method. The authors come to the result that firms experienc- ing losses related to foreign risk would have developed more sophisticated risk evalua- tion methods. Many companies use a parent and subsidiary viewpoint. Furthermore the concrete implementation of capital budgeting methods depends on the target region. Wilson (1993) 729 UK MNC of the Times 1000 Index 59 (8%) 20 interviews for further investiga- tion The study intends to examine the capital budgeting methods used by UK based MNC. A special focus is on the inte- gration of risk in the financial evaluation techniques. UK MNCs are not...
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