Agency costs and the performance implications of international joint venture internalization

Article Abstract:

The formation of international joint ventures (IJV) is examined with particular focus on IJV internalization. Internalization is one type of IJV evolution that involves the acquisition of the IJV by one company through the buyout of its partner or partners. The study tests a contingency perspective on IJV buyouts by integrating standard agency theory arguments and event study methodology. Specifically, it tests the hypothesis that abnormal returns for the US parent company internalizing an IJV will be positively related to the parent's inside ownership percentage and to the interaction between its leverage and free cash flow, and will be negatively related to the parent's free cash flow. Findings suggest a positive relationship between the parent firm valuation effects and the firm's equity owned by insiders and the interaction of debt financing and free cash flow.

Research, International aspects, International business enterprises, Multinational corporations, Joint ventures, Agency theory

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Technology search investments: evolutionary, option reasoning, and option pricing approaches

Article Abstract:

Evolutionary approach explains decision-making processes under bounded rationality. It's approach for option reasoning fosters flexibility by investing in more than one technology, and approach for option pricing base their search investments on forward-looking calculations of technology option prices.

Financial management, Company investment, Technology, Technology in education, Organization

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An empirical test of heuristics and biases affecting real option valuation

Article Abstract:

Finance and management researchers and management consultants are involved actively in developing techniques for framing and evaluating real option investments. Real option theory highlights the potential benefit from waiting, during which managers can incorporate new information into their decisions.

Evaluation, Investment analysis, Securities analysis

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