Abstract
Significant economic activities in the Latin American and Caribbean countries (LACs) since the debt crisis of the early to mid-1980s have created opportunities for U.S. firms to expand their business presence in the region. This study provides evidence on the shareholders' wealth effects of expansion by U.S. firms into the LACs. Three hundred twenty-two announcements of expansion to the LACs by U.S. firms during 1980 1996 are analyzed using event study methodology. Statistically significant excess returns of 0.52 percent are observed for the average expansion. Analysis of subsamples by mode of expansion shows that announcements of both FDI and non-FDI forms of expansion produce positive significant excess re turns. Significant positive reactions are observed for expansion to Brazil. Cross-sectional regression results provide additional insights into the determinants of wealth effects for these announcements.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: 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.