Market transparency and international allocation of capital

The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transpare...

Full description

Saved in:
Bibliographic Details
Published in:Asia-Pacific journal of regional science 2019-06, Vol.3 (2), p.421-429
Main Authors: Broll, Udo, Eckwert, Bernhard, Wong, Keith K. P.
Format: Article
Language:English
Subjects:
Asian Economics
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Regional/Spatial Science
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
cited_by
cites cdi_FETCH-LOGICAL-c240t-b5c9fff1fa717090cd6930fa20ac0d3183f00069720611eccf839ea66895d7cf3
container_end_page 429
container_issue 2
container_start_page 421
container_title Asia-Pacific journal of regional science
container_volume 3
creator Broll, Udo
Eckwert, Bernhard
Wong, Keith K. P.
description The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency .
doi_str_mv 10.1007/s41685-018-0101-5
format article
fullrecord <record><control><sourceid>crossref_sprin</sourceid><recordid>TN_cdi_crossref_primary_10_1007_s41685_018_0101_5</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>10_1007_s41685_018_0101_5</sourcerecordid><originalsourceid>FETCH-LOGICAL-c240t-b5c9fff1fa717090cd6930fa20ac0d3183f00069720611eccf839ea66895d7cf3</originalsourceid><addsrcrecordid>eNp9kM1OwzAMgCMEEtPYA3DrCwTspkkacUITP5OGuMA5MmmCOkpaJeWwtydjiCMHy7bkz7I_xi4RrhBAX-cGVSs5YFsCkMsTtqglGK6NbE7_6kads1XOOwCohQYpmgW7eaL04edqThTzRMlHt68odlUfZ58izf0YaahoGEb301RjqBxN_UzDBTsLNGS_-s1L9np_97J-5Nvnh836dstd3cDM36QzIQQMpFGDAdcpIyBQDeSgE9iKUC5SRtegEL1zoRXGk1KtkZ12QSwZHve6NOacfLBT6j8p7S2CPQiwRwG2CLAHAVYWpj4yuczGd5_sbvwq_wz5H-gbqvRd7g</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype></control><display><type>article</type><title>Market transparency and international allocation of capital</title><source>Springer Nature</source><creator>Broll, Udo ; Eckwert, Bernhard ; Wong, Keith K. P.</creator><creatorcontrib>Broll, Udo ; Eckwert, Bernhard ; Wong, Keith K. P.</creatorcontrib><description>The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency .</description><identifier>ISSN: 2509-7946</identifier><identifier>EISSN: 2509-7954</identifier><identifier>DOI: 10.1007/s41685-018-0101-5</identifier><language>eng</language><publisher>Singapore: Springer Singapore</publisher><subject>Asian Economics ; Economic Theory/Quantitative Economics/Mathematical Methods ; Economics ; Economics and Finance ; Regional/Spatial Science</subject><ispartof>Asia-Pacific journal of regional science, 2019-06, Vol.3 (2), p.421-429</ispartof><rights>The Japan Section of the Regional Science Association International 2018</rights><woscitedreferencessubscribed>false</woscitedreferencessubscribed><cites>FETCH-LOGICAL-c240t-b5c9fff1fa717090cd6930fa20ac0d3183f00069720611eccf839ea66895d7cf3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27923,27924</link.rule.ids></links><search><creatorcontrib>Broll, Udo</creatorcontrib><creatorcontrib>Eckwert, Bernhard</creatorcontrib><creatorcontrib>Wong, Keith K. P.</creatorcontrib><title>Market transparency and international allocation of capital</title><title>Asia-Pacific journal of regional science</title><addtitle>Asia-Pac J Reg Sci</addtitle><description>The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency .</description><subject>Asian Economics</subject><subject>Economic Theory/Quantitative Economics/Mathematical Methods</subject><subject>Economics</subject><subject>Economics and Finance</subject><subject>Regional/Spatial Science</subject><issn>2509-7946</issn><issn>2509-7954</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2019</creationdate><recordtype>article</recordtype><recordid>eNp9kM1OwzAMgCMEEtPYA3DrCwTspkkacUITP5OGuMA5MmmCOkpaJeWwtydjiCMHy7bkz7I_xi4RrhBAX-cGVSs5YFsCkMsTtqglGK6NbE7_6kads1XOOwCohQYpmgW7eaL04edqThTzRMlHt68odlUfZ58izf0YaahoGEb301RjqBxN_UzDBTsLNGS_-s1L9np_97J-5Nvnh836dstd3cDM36QzIQQMpFGDAdcpIyBQDeSgE9iKUC5SRtegEL1zoRXGk1KtkZ12QSwZHve6NOacfLBT6j8p7S2CPQiwRwG2CLAHAVYWpj4yuczGd5_sbvwq_wz5H-gbqvRd7g</recordid><startdate>20190614</startdate><enddate>20190614</enddate><creator>Broll, Udo</creator><creator>Eckwert, Bernhard</creator><creator>Wong, Keith K. P.</creator><general>Springer Singapore</general><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20190614</creationdate><title>Market transparency and international allocation of capital</title><author>Broll, Udo ; Eckwert, Bernhard ; Wong, Keith K. P.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c240t-b5c9fff1fa717090cd6930fa20ac0d3183f00069720611eccf839ea66895d7cf3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2019</creationdate><topic>Asian Economics</topic><topic>Economic Theory/Quantitative Economics/Mathematical Methods</topic><topic>Economics</topic><topic>Economics and Finance</topic><topic>Regional/Spatial Science</topic><toplevel>online_resources</toplevel><creatorcontrib>Broll, Udo</creatorcontrib><creatorcontrib>Eckwert, Bernhard</creatorcontrib><creatorcontrib>Wong, Keith K. P.</creatorcontrib><collection>CrossRef</collection><jtitle>Asia-Pacific journal of regional science</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Broll, Udo</au><au>Eckwert, Bernhard</au><au>Wong, Keith K. P.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Market transparency and international allocation of capital</atitle><jtitle>Asia-Pacific journal of regional science</jtitle><stitle>Asia-Pac J Reg Sci</stitle><date>2019-06-14</date><risdate>2019</risdate><volume>3</volume><issue>2</issue><spage>421</spage><epage>429</epage><pages>421-429</pages><issn>2509-7946</issn><eissn>2509-7954</eissn><abstract>The paper analyzes the interaction between the domestic and foreign capital allocation of a multinational firm, and market transparency in the foreign country. Foreign capital investment is risky because of uncertainties about the host country’s institutions and market conditions. We model transparency through a publicly observable signal that provides information about the quality of institutions and market conditions in the foreign country. Under higher transparency, the public signal conveys more precise information. It is shown that higher transparency leads to more dispersion of conditionally expected foreign country risks as they become more sensitive to the realization of the public signal. We characterize conditions under which more transparency encourages or discourages foreign investment. Regardless of the volume of capital flows, the ex-ante expected total cash flow of the firm always increases with more transparency .</abstract><cop>Singapore</cop><pub>Springer Singapore</pub><doi>10.1007/s41685-018-0101-5</doi><tpages>9</tpages></addata></record>
fulltext fulltext
identifier ISSN: 2509-7946
ispartof Asia-Pacific journal of regional science, 2019-06, Vol.3 (2), p.421-429
issn 2509-7946
2509-7954
language eng
recordid cdi_crossref_primary_10_1007_s41685_018_0101_5
source Springer Nature
subjects Asian Economics
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Regional/Spatial Science
title Market transparency and international allocation of capital
url http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-01-12T01%3A59%3A58IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-crossref_sprin&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Market%20transparency%20and%20international%20allocation%20of%20capital&rft.jtitle=Asia-Pacific%20journal%20of%20regional%20science&rft.au=Broll,%20Udo&rft.date=2019-06-14&rft.volume=3&rft.issue=2&rft.spage=421&rft.epage=429&rft.pages=421-429&rft.issn=2509-7946&rft.eissn=2509-7954&rft_id=info:doi/10.1007/s41685-018-0101-5&rft_dat=%3Ccrossref_sprin%3E10_1007_s41685_018_0101_5%3C/crossref_sprin%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-c240t-b5c9fff1fa717090cd6930fa20ac0d3183f00069720611eccf839ea66895d7cf3%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_id=info:pmid/&rfr_iscdi=true