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

PSC In The News

RSS Feed icon

Singh discusses her research in India on infertility

Johnston concerned declines in teen smoking threatened by e-cigarettes

Frey discusses book Diversity Explosion

Highlights

Apply for 2-year NICHD Postdoctoral Fellowships that begin September 2015

PSC Fall 2014 Newsletter now available

Martha Bailey and Nicolas Duquette win Cole Prize for article on War on Poverty

Michigan's graduate sociology program tied for 4th with Stanford in USN&WR rankings

Next Brown Bag

Monday, Jan 12
Filiz Garip, Changing Dynamics of Mexico-U.S. Migration

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