Lindner, Thomas, Müllner, Jakob, Puck, Jonas. 2016. Cost of capital in an international context: Institutional distance, quality, and dynamics. Journal of International Management 22 (3), 234-248.
BibTeX
Abstract
Cost of debt is a key cognitive anchor for managerial decisions and an important determinant of firm profitability. We extend international management research by analyzing the effects of institutional distance, institutional quality, and their dynamics on the cost of debt in the context of foreign direct investments (FDI). We test our conceptual model on a sample of companies making 3,764 greenfield foreign direct investments from developed into less developed markets. Using hierarchical linear modelling, we show that the financial consequences of internationalizing into countries with weak institutions depend on both the institutional distance between countries, as well as their institutional quality. Furthermore, we find that recent changes in institutional quality form expectations about future development and ultimately influence post investment financing costs.
Tags
Press 'enter' for creating the tagPublication's profile
Status of publication | Published |
---|---|
Affiliation | WU |
Type of publication | Journal article |
Journal | Journal of International Management |
Citation Index | SSCI |
WU Journalrating 2009 | A |
WU-Journal-Rating new | STRAT-B, WH-B |
Language | English |
Title | Cost of capital in an international context: Institutional distance, quality, and dynamics |
Volume | 22 |
Number | 3 |
Year | 2016 |
Page from | 234 |
Page to | 248 |
Reviewed? | Y |
URL | http://www.sciencedirect.com/science/article/pii/S1075425316000028 |
DOI | http://dx.doi.org/10.1016/j.intman.2016.01.001 |
Associations
- People
- Lindner, Thomas (Details)
- Müllner, Jakob (Details)
- Puck, Jonas (Details)
- Organization
- Institute for International Business (Zapkau) (Details)
- Institute for International Business (Puck) (Details)
- Department of Global Business and Trade DP (Details)
- Competence Center for Emerging Markets and CEE WE (Details)
- Institute for International Business IN (Details)
- Research areas (ÖSTAT Classification 'Statistik Austria')
- 5300 Economics (Details)