Abstract
This study utilizes the COMPUSTAT database to extract 31,002 firm-year observations for the firms publicly traded on US exchanges during the 1995–2001 period, and examines the relationship between corporate international diversification and technical productive efficiency. The parameters of a stochastic frontier function are estimated simultaneously with the firm-specific production inefficiency effects in a panel framework. After controlling for product diversification, industry and firm size, the author finds the degree of international diversification is positively related to production efficiency. The results are robust to the choice of multinationality variables including number of geographic segments, foreign income ratio and foreign tax ratio. In all, the results suggest that multinational corporations are utilizing their operating flexibility.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
