Performance Results of Multinationality

Multinationality, or the degree of internationalization, has favorable financial results and implications. Highly valued by the market as a hidden asset, multinationality is related to earnings management, systematic risk, capital structure, and growth opportunities as measured by the investment opportunity set. Riahi-Belkaoui examines the performance results of a multinational strategy and concludes that multinationality can be quantified and does play a significant role in keeping a firm healthy and growing. His book is a far-reaching examination of the data and a persuasive argument for why firms should make multinationality a critical part of their overall business strategy. Riahi-Belkaoui presents research results supporting multinationality. He confirms that the market reacts more favorably the larger (smaller) cash flows are (accruals),and he shows that the preference of cash flows over accruals will increase under conditions of high multinationality and high reputation. He argues that the level of multinationality affects net income and net worth and thereby, political costs and risk. Analyzing the association between multinationality and systematic risk as measured by the market model beta, he finds that systematic risk is positively related to the level of multinationality after controlling for corporate reputation and other factors. He examines the role of multinationality and profitability as determinants of the investment opportunity set and considers whether a firm's investment opportunity is associated with corporate financing. Finally, he investigates whether disclosure policy, level of economic risk, and the nature of the alignment of financial and tax accounting explain differences in financial analysts' forecast error internationally. The book concludes with a model of the determinants of the investment opportunity set of multinational firms.

Table of Contents:
Preface Empirical Validation of a General Model of International Production The Valuation of the Multinationality of U.S. Multinationality Firms The Degree of Internalization and the Value of the Firm: Theory and Evidence The Value-Relevance of Earnings, Cash Flows, Multinationality, and Corporate Reputation as Assessed by Securing Market Effects Contextual Accrual and Cash Flow-Based Valuation Models: Impact of Multinationality and Reputation Multinationality and Earnings Management The Association between Systematic Risk and Multinationality: A Growth Opportunities Perspective Profitability, Multinationality, and Investment Opportunity Set Investment Opportunity Set and Corporate Financing: The Contingency of Multinationality Determinants of Prediction Performance of Earnings Forecasts Internationally: The Effects of Disclosure, Economic Risk, and Alignment of Financial and Tax Accounting Empirical Validation of a General Model of Growth Opportunities Index

About the Author :
AHMED RIAHI-BELKAOUI is CBA Distinguished Professor of Accounting in the College of Business Administration, University of Illinois at Chicago. Author of more than 30 Quorum books and coauthor of several more, he is also a prolific author of articles published in major scholarly and professional journals, and has served on numerous editorial boards.