Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Lam looks at population and development in next 15 years in UN commission keynote address

Mitchell et al. find harsh family environments may magnify disadvantage via impact on 'genetic architecture'

Frey says Arizona's political paradoxes explained in part by demography

Highlights

PSC newsletter spring 2014 issue now available

Kusunoki wins faculty seed grant award from Institute for Research on Women and Gender

2014 PAA Annual Meeting, May 1-3, Boston

USN&WR ranks Michigan among best in nation for graduate education in sociology, public health, economics

Next Brown Bag

Monday, April 21
Grant Miller: Managerial Incentives in Public Service Delivery

Capital structure with risky foreign investment

Archived Abstract of Former PSC Researcher

Desai, Mihir A., C. Fritz Foley, and James Hines, Jr. 2008. "Capital structure with risky foreign investment." Journal of Financial Economics, 88(3): 534-553.

Firms facing significant business risks have incentives to mitigate the costs of these risks by adjusting their capital structures. This paper investigates this link by analyzing the exposures of multinational firms to political risk. The evidence indicates that returns on investment in politically risky countries are more volatile than returns elsewhere. Multinational firms reduce their leverage in response to these political risks: a one standard deviation increase in foreign political risk is associated with 3.5% reduced leverage. The effect of foreign political risks on leverage is most pronounced for firms in industries whose returns are most susceptible to political influence. (C) 2007 Elsevier B.V. All rights reserved.

DOI:10.1016/j.jfineco.2007.05.002 (Full Text)

Browse | Search : All Pubs | Next