Abstract
This paper contends that when entry mode choices are aligned with the characteristics of the host country, investors are likely to respond more positively to the expansion announcement than when there is no or little alignment. Empirical results from the international hotel industry support this contention. The findings specifically reveal that the announcements of new management contracts in developing countries, and new franchise agreements in developed countries, cause superior abnormal returns. The study also further supports the notion that control and ownership need to be treated as separate dimensions in the entry mode literature.
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