Abstract
Corporate international diversification theory posits that multinational corporations (MNCs) should have lower risk and higher financial leverage than purely domestic corporations (DCs). We suggest an alternative upstream-downstream hypothesis according to which the overall effect of internationalization on the risk and leverage of MNCs is expected to vary with home and target market conditions. The empirical results are consistent with the suggested hypothesis.
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*Chuck Kwok is Professor of International Business at the University of South Carolina. He was Vice President-Administration of the Academy of International Business in 1995-96.
**David Reeb is an Assistant Professor in the Kogod School of Business at American University. His research focuses on the financial aspects of international business.
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Kwok, C., Reeb, D. Internationalization and Firm Risk: An Upstream-Downstream Hypothesis. J Int Bus Stud 31, 611–629 (2000). https://doi.org/10.1057/palgrave.jibs.8490925
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DOI: https://doi.org/10.1057/palgrave.jibs.8490925