Can British multinational enterprises finance economic development in South East Asia?

Multinational Business Review

Volumn 21, Issue 2, 2013, Pages 122-147

  Nguyen, Quyen T k ^a  

^a UNIVERSITY OF READING   (United Kingdom)

Author keywords

Capital structure; Economic development; Financing; International investments; Multinational companies; Multinational enterprise subsidiary; South East Asia; United Kingdom

Indexed keywords

EID: 84992986615     PISSN: 1525383X     EISSN: 20541686     Source Type: Journal    
DOI: 10.1108/MBR-03-2013-0014     Document Type: Article

References (128)

1. Adedeji, A. (1998), “Does the pecking order hypothesis explain the dividend payout ratio of firms in the UK?”, Journal of Business Finance & Accounting, Vol. 25 Nos 9/10, pp. 1127-1155.
2. Adedeji, A. (2002), “A cross-sectional testing of pecking order hypothesis against static trade-off theory on UK data”, unpublished work.
3. Aggarwal, R. and Baliga, G. (1987), “Capital structure among Latin American companies”, Managerial Finance, Vol. 13 No. 1, pp. 3-11.
4. Aggarwal, R. and Kyaw, N.A. (2008), “Internal capital networks as a source of MNC competitive advantage: evidence from foreign subsidiary capital structure decisions”, Research in International Business and Finance, Vol. 22 No. 3, pp. 409-439.
5. Aggarwal, R. and Zong, S. (2006), “The cash flow-investment relationship: international evidence of limited access to external finance”, Journal of Multinational Financial Management, Vol. 16 No. 1, pp. 89-104.
6. Agmon, T. (2006), “Bringing financial economics into international business research: taking advantage of a paradigm change”, Journal of International Business Studies, Vol. 37 No. 5, pp. 575-577.
7. Aitken, B.J. and Harrison, A.E. (1999), “Do domestic firms benefit from direct foreign investment? Evidence from Venezuela”, American Economic Review, Vol. 89 No. 3, pp. 605-618.
8. Allen, D.E. (1991), “The determinants of the capital structure of listed Australian companies: the financial managers' perspective”, Australian Journal of Management, Vol. 16 No. 2, pp. 103-128.
9. Ambos, T.C. and Birkinshaw, J.M. (2010), “Headquarters' attention and its effect on subsidiary performance”, Management International Review, Vol. 50 No. 4, pp. 449-469.
10. Bancel, F. and Mittoo, U.R. (2004), “Cross-country determinants of capital structure choice: a survey of European firms”, Financial Management, Vol. 33 No. 4, pp. 103-132.
11. Barclay, M.J. and Smith, C.W. (1995), “The priority structure of corporate liabilities”, Journal of Finance, Vol. 50 No. 3, pp. 899-917.
12. Barnea, A., Haugen, R.A. and Senbet, L.W. (1981), “Market imperfections, agency problems and capital structure: a review”, Financial Management, Vol. 10 No. 3, pp. 7-22.
13. Barton, S.L. and Gordon, P.L. (1988), “Corporate strategy and capital structure”, Strategic Management Journal, Vol. 9 No. 6, pp. 623-632.
14. Beattie, V., Goodacre, A. and Thomson, S.J. (2006), “Corporate financing decisions: UK survey evidence”, Journal of Business Finance & Accounting, Vol. 33 Nos 9/10, pp. 1402-1434.
15. Beck, T., Demirguc-Kunt, A. and Maksimovic, V. (2008), “Financing patterns around the world: are small firms different?”, Journal of Financial Economics, Vol. 89 No. 3, pp. 467-487.
16. Belkaoui, A. (1975), “A Canadian survey of financial structure”, Financial Management, Vol. 4 No. 1, pp. 74-79.
17. Bennett, M. and Donnelly, R. (1993), “The determinants of capital structure: some UK evidence”, British Accounting Review, Vol. 25 No. 1, pp. 43-59.
18. Bevan, A.A. and Danbolt, J. (2002), “Capital structure and its determinants in the UK: a decompositional analysis”, Applied Financial Economics, Vol. 12 No. 3, pp. 159-170.
19. Bevan, A.A. and Danbolt, J. (2004), “Testing for inconsistencies in the estimation of UK capital structure determinants”, Applied Financial Economics, Vol. 14 No. 1, pp. 55-66.
20. Bharath, S.T., Pasquariello, P. and Wu, G. (2009), “Does asymmetric information drive capital structure decisions?”, Review of Financial Studies, Vol. 22 No. 8, pp. 3211-3243.
21. Blomström, M. and Sjöholm, F. (1999), “Technology transfer and spillovers: does local participation with multinationals matter?”, European Economic Review, Vol. 43 Nos 4-6, pp. 915-923.
22. Bouquet, C., Morrison, A. and Birkinshaw, J.M. (2009), “International attention and multinational enterprise performance”, Journal of International Business Studies, Vol. 40 No. 1, pp. 108-131.
23. Bowe, M., Filatotchev, I. and Marshall, A. (2010), “Integrating contemporary finance and international business research”, International Business Review, Vol. 19 No. 5, pp. 435-445.
24. Bowen, R.M., Daley, L.A. and Huber, C.C. (1982), “Leverage measures and industrial classification: review and additional evidence”, Financial Management, Vol. 11 No. 4, pp. 10-20.
25. Brander, J.A. and Lewis, T.R. (1986), “Oligopoly and financial structure: the limited liability effect”, American Economic Review, Vol. 76 No. 5, pp. 956-970.
26. Brounen, D., de Jong, A. and Koeedijk, K. (2006), “Capital structure policies in Europe: survey evidence”, Journal of Banking & Finance, Vol. 30 No. 5, pp. 1409-1442.
27. Brouthers, K.D. and Hennart, J.-F. (2007), “Boundaries of the firm: insights from international entry mode research”, Journal of Management, Vol. 33 No. 3, pp. 395-425.
28. Buckley, P. and Casson, M. (1976), The Future of Multinational Enterprise, Macmillan, Basingstoke.
29. Burlacu, R. (2000), “New evidence on the pecking order hypothesis: the case of French convertible bonds”, Journal of Multinational Financial Management, Vol. 10 Nos 3/4, pp. 439-459.
30. Caves, R.E. (1974), “Multinational firms, competition and productivity in host-country markets”, Economica, Vol. 41 No. 162, pp. 176-193.
31. Chakraborty, I. (2010), “Capital structure in an emerging stock market: the case of India”, Research in International Business and Finance, Vol. 24 No. 3, pp. 295-314.
32. Davenport-Hines, R.P.T. and Jones, G. (1989), British Business in Asia Since 1860, Cambridge University Press, Cambridge.
33. de Haan, L. and Hinloopen, J. (2003), “Preference hierarchies for internal finance, bank loans, bond, and share issues: evidence for Dutch firms”, Journal of Empirical Finance, Vol. 10 No. 5, pp. 661-681.
34. de Jong, A., Verbeek, M. and Verwijmeren, P. (2011), “Firms' debt-equity decisions when the static trade-off theory and the pecking order theory disagree”, Journal of Banking & Finance, Vol. 35 No. 5, pp. 1303-1314.
35. Delcoure, N. (2007), “The determinants of capital structure in transitional economies”, International Review of Economics and Finance, Vol. 16 No. 3, pp. 400-415.
36. Donaldson, G. (1961), Corporate Debt Capacity: A Study of Corporate Debt Policy and the Determination of Corporate Debt Capacity, Harvard Graduate School of Business Administration, Boston, MA.
37. Eckert, S. and Engelhard, J. (1999), “Towards a capital structure theory for the multinational company”, Management International Review, Vol. 39 No. 2, pp. 105-136.
38. Errunza, V.R. (1979), “Financing MNC subsidiaries in Central America”, Journal of International Business Studies, Vol. 10 No. 2, pp. 88-93.
39. Fama, E.F. and French, K.R. (2002), “Testing trade-off and pecking order predictions about dividends and debt”, Review of Financial Studies, Vol. 15 No. 1, pp. 1-34.
40. Fama, E.F. and French, K.R. (2005), “Financing decisions: who issues stock?”, Journal of Financial Economics, Vol. 76 No. 3, pp. 549-582.
41. Ferri, M.G. and Jones, W.H. (1979), “Determinants of financial structure: a new methodological approach”, Journal of Finance, Vol. 34 No. 3, pp. 631-644.
42. Frank, M.Z. and Goyal, V.K. (2003), “Testing the pecking order theory of capital structure”, Journal of Financial Economics, Vol. 67 No. 2, pp. 217-248.
43. Fulghieri, P. and Lukin, D. (2001), “Information production, dilution costs, and optimal security design”, Journal of Financial Economics, Vol. 61 No. 1, pp. 3-42.
44. Garlappi, L. and Huang, J. (2006), “Are stocks desirable in tax-deferred accounts?”, Journal of Public Economics, Vol. 90 No. 12, pp. 2257-2283.
45. Gaud, P., Hoesli, M. and Bender, A. (2007), “Debt-equity choice in Europe”, International Review of Financial Analysis, Vol. 16 No. 3, pp. 201-222.
46. Globerman, S. (1979), “Foreign direct investment and ‘spillover’ efficiency benefits in Canadian manufacturing industries”, Canadian Journal of Economics, Vol. 12 No. 1, pp. 42-56.
47. Graham, J.R. and Harvey, C.R. (2001), “The theory and practice of corporate finance: evidence from the field”, Journal of Financial Economics, Vol. 60 Nos 2/3, pp. 187-243.
48. Grinblatt, M. and Titman, S. (1998), Financial Markets and Corporate Strategy, Irwin/McGraw-Hill, New York, NY.
49. Grossman, S.J. and Hart, O. (1982), “Corporate financial structure and managerial incentives”, in McCall, J. (Ed.), The Economics of Information and Uncertainty, University of Chicago Press, Chicago, IL, pp. 107-140.
50. Guriev, S. and Kvasov, D. (2009), “Imperfect competition in financial markets and capital structure”, Journal of Economic Behaviour and Organization, Vol. 72 No. 1, pp. 131-146.
51. Harris, M. and Raviv, A. (1990), “Capital structure and informational role of debt”, Journal of Finance, Vol. 45 No. 2, pp. 321-350.
52. Harris, M. and Raviv, A. (1991), “The theory of capital structure”, Journal of Finance, Vol. 46 No. 1, pp. 297-356.
53. Harzing, A.-W. (2000), “Cross national industrial mail surveys: why do response rates differ between countries?”, Industrial Marketing Management, Vol. 29 No. 3, pp. 243-254.
54. Haskel, J., Pereira, S. and Slaughter, M. (2002), “Does inward foreign direct investment boost the productivity of domestic firms?”, NBER Working Paper Series, No. 8724, National Bureau of Economic Research, Cambridge, MA.
55. Helwege, J. and Liang, N. (1996), “Is there a pecking order? Evidence from panel of IPO firms”, Journal of Financial Economics, Vol. 40 No. 3, pp. 429-458.
56. Hennart, J.F. (1982), A Theory of Multinational Enterprise, University of Michigan Press, Ann Arbor, MI.
57. Hennessy, C.A., Livdan, D. and Miranda, B. (2010), “Repeated signaling and firm dynamics”, Review of Financial Studies, Vol. 23 No. 5, pp. 1981-2023.
58. Hodder, J.E. and Senbet, L.W. (1990), “International capital structure equilibrium”, Journal of Finance, Vol. 45 No. 5, pp. 1495-1516.
59. Hood, N. and Young, S. (1976), “US investments in Scotland: aspect of the branch factory syndrome”, in Hood, N. (Ed.), Multinational Subsidiary: Management, Economic Development and Public Policy, Palgrave Macmillan, Basingstoke, pp. 15-32, Published in 2003.
60. Jensen, M.C. (1986), “Agency costs of free cash flow, corporate finance, and takeovers”, American Economic Review, Vol. 76 No. 2, pp. 323-339.
61. Jensen, M.C. and Meckling, W.H. (1976), “Theory of the firm: managerial behaviour, agency costs and ownership structure”, Journal of Financial Economics, Vol. 3 No. 4, pp. 305-360.
62. John, K., Senbet, L.W. and Sundaram, A.K. (1991), “Cross-border liability of multinational enterprises, border taxes, and capital structure”, Financial Management, Vol. 20 No. 4, pp. 54-67.
63. Jung, K., Kim, Y. and Stulz, R.M. (1996), “Timing, investment opportunities, managerial discretion, and the security issue decision”, Journal of Financial Economics, Vol. 42 No. 2, pp. 159-185.
64. Kester, W.C. (1986), “Capital and ownership structure: a comparison of United States and Japanese manufacturing corporations”, Financial Management, Vol. 15 No. 1, pp. 5-16.
65. Kokko, A. (1994), “Technology, market characteristics, and spillovers”, Journal of Development Economics, Vol. 43 No. 2, pp. 279-293.
66. Kolasinski, A.C. (2009), “Subsidiary debt, capital structure and internal capital markets”, Journal of Financial Economics, Vol. 94 No. 2, pp. 327-343.
67. Kornbluth, J.S. and Vinso, J.D. (1982), “Capital structure and the financing of the multinational corporation”, Journal of Financial and Quantitative Analysis, Vol. 17 No. 2, pp. 147-178.
68. Kraus, A. and Litzenberger, R.H. (1973), “A state preference model of optimal financial leverage”, Journal of Finance, Vol. 28 No. 4, pp. 911-922.
69. La Porta, R., Lopez-de-Silanes, F., Schleifer, A. and Vishny, R.W. (1997), “Legal determinants of external finance”, Journal of Finance, Vol. 52 No. 3, pp. 1131-1150.
70. La Porta, R., Lopez-de-Silanes, F., Schleifer, A. and Vishny, R.W. (1998), “Law and finance”, Journal of Political Economy, Vol. 106 No. 6, pp. 1113-1155.
71. Lasfer, M.A. (1999), “Debt structure, agency costs and firm's size: an empirical investigation”, working paper, City University Business School, London.
72. Leary, M.T. and Roberts, M.R. (2010), “The pecking order, debt capacity, and information asymmetry”, Journal of Financial Economics, Vol. 95 No. 3, pp. 332-355.
73. Lee, H. and Gentry, J.A. (1995), “An empirical study of the corporate choice among common stock, convertible bonds and straight debt: a cash flow interpretation”, Quarterly Review of Economics and Finance, Vol. 35 No. 4, pp. 397-419.
74. Leland, H.E. and Pyle, D.H. (1977), “Informational asymmetries, financial structure and financial intermediation”, Journal of Finance, Vol. 32 No. 2, pp. 371-387.
75. Lin, Y., Hu, S. and Chen, M. (2008), “Testing pecking order prediction from the view point of managerial optimism: some empirical evidence from Taiwan”, Behavioral Finance in Asia, Vol. 16 Nos 1/2, pp. 160-181.
76. Lipsey, R.E. (2004), “Home and host country effects of FDI”, in Robert, E. and Winters, L.A. (Eds), Challenges to Globalization, University of Chicago Press, Chicago, IL, pp. 333-382.
77. Manso, G., Strulovici, B. and Tchistyi, A. (2010), “Performance-sensitive debt”, Review of Financial Studies, Vol. 23 No. 5, pp. 1819-1854.
78. Marsh, P. (1982), “The choice between equity and debt: an empirical study”, Journal of Finance, Vol. 37 No. 1, pp. 121-144.
79. Modigliani, F. and Miller, M.H. (1958), “The cost of capital, corporation finance, and the theory of investment”, American Economic Review, Vol. 48 No. 3, pp. 261-297.
80. Modigliani, F. and Miller, M.H. (1963), “Corporate income taxes and the cost of capital: a correction”, American Economic Review, Vol. 53 No. 3, pp. 433-443.
81. Morellec, E. and Schürhoff, N. (2011), “Corporate investment and financing under asymmetric information”, Journal of Financial Economics, Vol. 99 No. 2, pp. 262-288.
82. Myers, S.C. (1984), “The capital structure puzzle”, Journal of Finance, Vol. 39 No. 3, pp. 575-592.
83. Myers, S.C. and Majluf, N.S. (1984), “Corporate financing and investment decisions when firms have information that investors do not have”, Journal of Financial Economics, Vol. 13 No. 2, pp. 187-221.
84. Naidu, G.N. (1983), “Country and industry norms of capital structure: Asian evidence”, Management International Review, Vol. 24 No. 1, pp. 64-70.
85. Narula, R. and Dunning, J. (2010), “Multinational enterprises, development and globalization: some clarification and a research agenda”, Oxford Development Studies, Vol. 38 No. 3, pp. 263-287.
86. Naumann-Etienne, R. (1974), “A framework for financial decisions in the multinational corporation – summary of recent research”, Journal of Financial and Quantitative Analysis – Proceedings, 9 November, pp. 859-874.
87. Nguyen, Q.T.K. (2013), “The regional strategies of British multinational subsidiaries in South East Asia”, British Journal of Management, May, forthcoming, DOI: 10.1111/1467-8551.12006.
88. Norton, E. (1989), “Determinants of capital structure: a survey”, in Lee, C.F. (Ed.), Advances in Financial Planning and Forecasting, Vol. 3, JAI Press, Greenwich, CT, pp. 323-350.
89. Oxelheim, L., Randoy, T. and Stonehill, A. (2001), “On the treatment of finance-specific factors within the OLI paradigm”, International Business Review, Vol. 10 No. 4, pp. 381-398.
90. Ozkan, A. (2001), “Determinants of capital structure and adjustment to long-run target; evidence from UK company panel data”, Journal of Business Finance & Accounting, Vol. 28 Nos 1/2, pp. 175-198.
91. Pinegar, J.M. and Wilbricht, L. (1989), “What managers think of capital structure: a survey”, Financial Management, Vol. 18 No. 4, pp. 82-91.
92. Prahalad, C.K. (2005), The Fortune at the Bottom of the Pyramid, Wharton School Publishing, Upper Saddle River, NJ.
93. Qian, Y., Tian, Y. and Wirjanto, T.S. (2009), “Do Chinese publicly listed companies adjust their capital structure toward a target level?”, China Economic Review, Vol. 20 No. 4, pp. 662-676.
94. Remmers, L., Stonehill, A., Wright, R. and Beekhuisen, T. (1974), “Industry and size as debt ratio determinants in manufacturing internationally”, Financial Management, Vol. 3 No. 3, pp. 24-32.
95. Robbins, S.M. and Stobaugh, R.B. (1972), “Financing foreign affiliates”, Financial Management, Vol. 1 No. 4, pp. 556-565.
96. Robock, S. (1966), “Overseas financing for US international business”, Journal of Finance, Vol. 21 No. 2, pp. 297-307.
97. Rocheteau, G. (2011), “Payments and liquidity under adverse selection”, Journal of Monetary Economics, Vol. 58 No. 3, pp. 191-205.
98. Ross, S.A. (1977), “The determination of financial structure: the incentive signaling approach”, Bell Journal of Economics, Vol. 8 No. 1, pp. 23-40.
99. Rugman, A.M. (1980), “Internalization theory and corporate international finance”, California Management Review, Vol. 23 No. 2, pp. 73-79.
100. Rugman, A.M. (1981), Inside the Multinationals: The Economics of Internal Markets, Columbia University Press, New York, NY.
101. Rugman, A.M. and Collinson, S. (2012), International Business, 6th ed., FT Pearson Education Prentice Hall, Harlow.
102. Rugman, A.M. and D'Cruz, J. (2000), Multinationals as Flagship Firms: Regional Business Network, Oxford University Press, Oxford.
103. Rugman, A.M. and Doh, J.P. (2008), Multinationals and Development, Yale University Press, New Haven, CT.
104. Rutherford, J. (1988), “An international perspective on the capital structure puzzle”, in Stern, J. and Chew, D. (Eds), New Developments in International Finance, Basil Blackwell, New York, NY.
105. Scott, D.F. and Johnson, D.J. (1982), “Financing policies and practices in large corporations”, Financial Management, Vol. 11 No. 2, pp. 51-59.
106. Scott, D.F. and Martin, J.D. (1974), “Industry influence on financial structure”, Financial Management, Vol. 4 No. 1, pp. 67-73.
107. Sekely, W. and Collins, J.M. (1988), “Cultural influences on international capital structure”, Journal of International Business Studies, Vol. 19 No. 1, pp. 87-100.
108. Shao, L.P. (1997), “Capital structure norms among foreign subsidiaries of US multinational enterprises”, Global Finance Journal, Vol. 8 No. 1, pp. 145-157.
109. Shapiro, A.C. (1975), “Evaluating financing costs for multinational subsidiaries”, Journal of International Business Studies, Vol. 6 No. 2, pp. 25-32.
110. Shapiro, A.C. (1978), “Financial structure and cost of capital of multinational corporation”, Journal of Financial and Quantitative Analysis, Vol. 13 No. 2, pp. 211-226.
111. Shenoy, C. and Koch, P.D. (1996), “The firm's leverage-cash flow relationship”, Journal of Empirical Finance, Vol. 2 No. 4, pp. 307-331.
112. Shyam-Sunder, L. and Myers, S.C. (1999), “Testing static trade-off against pecking order models of capital structure”, Journal of Financial Economics, Vol. 51 No. 2, pp. 219-244.
113. Smith, D. (1966), “Financial variables in international business”, Harvard Business Review, Vol. 44 No. 1, pp. 93-104.
114. Stiglitz, J.E. (1972), “Some aspects of the pure theory of corporate finance: bankruptcy and takeover”, Bell Journal of Economics and Management, Vol. 3 No. 2, pp. 458-482.
115. Stobaugh, R. (1970), “Financing foreign subsidiaries of US-controlled multinational enterprises”, Journal of International Business Studies, Vol. 1 No. 1, pp. 43-64.
116. Stonehill, A., Beekhuisen, T., Wright, R., Remmers, L., Toy, N., Pares, R., Shapiro, A., Egan, D. and Bates, D. (1975), “Financial goals and debt ratio determinants: a survey of practices of five countries”, Financial Management, Vol. 4 No. 3, pp. 27-41.
117. Stulz, R.M. (1988), “Managerial control of voting rights: financing policies and the market for corporate control”, Journal of Financial Economics, Vol. 20 Nos 1/2, pp. 25-54.
118. Suchard, J. and Singh, M. (2006), “The determinants of the hybrid security issuance decision for Australian firms”, Pacific-Basin Finance Journal, Vol. 14 No. 3, pp. 269-290.
119. Titman, S. (1984), “The effect of capital structure on a firm's liquidation decisions”, Journal of Financial Economics, Vol. 13 No. 1, pp. 137-151.
120. Titman, S. and Wessels, R. (1988), “The determinants of capital structure choice”, Journal of Finance, Vol. 43 No. 1, pp. 1-19.
121. Tsuji, C. (2011), “An international survey of the evidence of pecking order theory of corporate financing”, Business and Economic Research, Vol. 1 No. 1, pp. 1-13.
122. Tucker, J. and Stoja, E. (2011), “Industry membership and capital structure dynamics in the UK”, International Review of Financial Analysis, Vol. 20 No. 4, pp. 207-214.
123. Verbeke, A. (2009), International Business Strategy, Cambridge University Press, Cambridge.
124. Voutsinas, K. and Werner, R.A. (2011), “Credit supply and corporate capital structure: evidence from Japan”, International Review of Financial Analysis, Vol. 20 No. 5, pp. 320-334.
125. Walsh, E.J. and Ryan, J. (1997), “Agency and tax explanations of security issuance decisions”, Journal of Business Finance & Accounting, Vol. 24 Nos 7/8, pp. 943-961.
126. Watson, R. and Wilson, N. (2002), “Small and medium size enterprise financing: a note on some of the empirical implications of a pecking order”, Journal of Business Finance & Accounting, Vol. 29 Nos 3/4, pp. 557-578.
127. Williamson, O. (1988), “Corporate finance and corporate governance”, Journal of Finance, Vol. 43 No. 3, pp. 567-591.
128. Wooster, J. and Thoman, G. (1974), “New financial priorities for MNCs”, Harvard Business Review, Vol. 52 No. 3, pp. 58-68.