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Multinationality, or the degree of internationalization, has favorable financial results and implications. Highly valued by the market as a hidden asset, multinationality is related to earnings management, systematic risk, capital structure, and growth opportunities as measured by the investment opportunity set. Riahi-Belkaoui examines the performance results of a multinational strategy and concludes that multinationality can be quantified and does play a significant role in keeping a firm healthy and growing. His book is a far-reaching examination of the data and a persuasive argument for why firms should make multinationality a critical part of their overall business strategy.
Riahi-Belkaoui presents research results supporting multinationality. He confirms that the market reacts more favorably the larger (smaller) cash flows are (accruals),and he shows that the preference of cash flows over accruals will increase under conditions of high multinationality and high reputation. He argues that the level of multinationality affects net income and net worth and thereby, political costs and risk. Analyzing the association between multinationality and systematic risk as measured by the market model beta, he finds that systematic risk is positively related to the level of multinationality after controlling for corporate reputation and other factors. He examines the role of multinationality and profitability as determinants of the investment opportunity set and considers whether a firm's investment opportunity is associated with corporate financing. Finally, he investigates whether disclosure policy, level of economic risk, and the nature of the alignment of financial and tax accounting explain differences in financial analysts' forecast error internationally. The book concludes with a model of the determinants of the investment opportunity set of multinational firms.
List of contents
Preface
Empirical Validation of a General Model of International Production
The Valuation of the Multinationality of U.S. Multinationality Firms
The Degree of Internalization and the Value of the Firm: Theory and Evidence
The Value-Relevance of Earnings, Cash Flows, Multinationality, and Corporate Reputation as Assessed by Securing Market Effects
Contextual Accrual and Cash Flow-Based Valuation Models: Impact of Multinationality and Reputation
Multinationality and Earnings Management
The Association between Systematic Risk and Multinationality: A Growth Opportunities Perspective
Profitability, Multinationality, and Investment Opportunity Set
Investment Opportunity Set and Corporate Financing: The Contingency of Multinationality
Determinants of Prediction Performance of Earnings Forecasts Internationally: The Effects of Disclosure, Economic Risk, and Alignment of Financial and Tax Accounting
Empirical Validation of a General Model of Growth Opportunities
Index
About the author
AHMED BELKAOUI is Professor of Accounting at the University of Illinois at Chicago and is a recognized authority on accounting. He has served as a consultant to corporations, institutions, and governments throughout the world. Among his recent books are
Human Information Processing in Accounting (Quorum, 1989),
Industrial Bonds and the Rating Process,
International Accounting,
Socio-Economic Accounting,
Public Policy and the Problems and Practices of Accounting, and
The Learning Curve (all published by Quorum Books). He is the author of more than 70 articles and reviews.
