Abstract
ABSTRACT Based on a sample of firms from 14 EU countries for the time period from 1990 to 2006 (42,458 firm-year-observations), we show that the valuation impact of multinationality varies depending on the legal tradition of a MNC's home country. In the case of insufficient country-specific legal institutions, firm-specific intangible assets function as a signalling device that distinguish efficient international resource allocation structures from less efficient ones. The valuation impact of multinationality increases with higher degrees of shareholder protection and lower degrees of creditor protection. Legal requirements regarding corporate disclosure have a positive influence on the valuation impact of multinationality. Overall our findings provide support of the agency contracting framework for assessing the valuation impact of corporate multinationality. Keywords multinationality, valuation impact, intangible assets, legal institutions, investor protection, home country
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