Title

Pitting real options theory against risk diversification theory: International diversification and joint ownership control in economic crisis

Date of this Version

1-1-2013

Document Type

Journal Article

Publication Details

Citation only.

Chung, C. C., Lee, S-H., Beamish, P. W., Southam, C., & Nam, D. (2013). Pitting real options theory against risk diversification theory: International diversification and joint ownership control in economic crisis. Journal of world business, 48(1), 122-136.

Access the publisher's website.

2013 HERDC submission. FoR: 150205

© Copyright Elsevier Inc., 2012. All rights reserved.

ISSN

1090-9516

Abstract

This study examines how MNE divestment decisions differ according to real options vs. risk diversification perspectives. We develop competing hypotheses in relation to international diversification and joint ownership control. Empirical results give consistent support to the real options perspective. We find that large MNEs with greater international diversification are less likely to divest their subsidiaries during times of economic crisis. The negative effect of joint ownership control is however manifested in both crisis-stricken and non-crisis country subsidiaries as well as in their interaction effect.

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This document has been peer reviewed.