Testing the Link Between Multinationality and the Return on Foreign Assets

Kudina, Alina; Rugman, Alan M.; Yip, George S.
September 2009
Multinational Business Review (St. Louis University);Fall2009, Vol. 17 Issue 3, p123
Academic Journal
A large and robust empirical literature demonstrates that there is a strong relationship between the performance of a multinational enterprise (MNE) and its degree of multinationality We develop a new metric to capture the return on foreign assets (ROFA), which we use as an alternative metric to return on total assets (ROTA) as a dependent variable representing performance. We find a significant S-shaped relation between ROFA and the degree of multinationality across a large set of UK firms.


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