STOCK MARKET RECOGNITION OF MULTINATIONALITY OF A FIRM AND INTERNATIONAL EVENTS |
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| Authors: | Ho C. Yang James W. Wansley William R. Lane |
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| Affiliation: | Professor Yang is from the School of Business at the University of Wisconsin-Eau-Claire, and his co-authors are from the College of Business Administration at Louisiana State University. |
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| Abstract: | This paper presents the results of empirical tests on a necessary condition for the diversification service hypothesis: market recognition of the multinationality of a firm and the existence of international factors. Employing both a two- factor international market model and residual analyses, this study examines whether the US stock market considers the multinationality of a firm and inter- national events which are expected to affect the price of MNCs' stock. The residual analysis is conducted over a period which includes both fixed and floating exchange rates. Results from both analyses support the hypothesis that the US stock market does recognize the multinationality of a firm. |
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