TY - JOUR
T1 - The short- and long-run effects of foreign investments on firm performance
T2 - evidence from Asia Pacific
AU - Likitwongkajon, Napaporn
AU - Vithessonthi, Chaiporn
N1 - Funding Information:
We are grateful to Carl Chen (the editor) and an anonymous reviewer for their helpful comments. In addition, we would like to thank participants at research seminars at Sunway University Business School for valuable feedbacks and suggestions on an earlier version of this manuscript. The first author gratefully acknowledges financial support from Faculty of Business Administration and Accountancy, Khon Kaen University .
Publisher Copyright:
© 2021 Elsevier Inc.
PY - 2021/9
Y1 - 2021/9
N2 - We study the implications of foreign investments for firm performance. Using a panel sample of publicly listed non-financial firms in 17 countries in Asia Pacific from 1990 to 2016, we examine whether firms with larger foreign investments perform better than those with smaller foreign investments and whether cost efficiency and revenue growth mediate the effect of foreign investments on firm performance. The IV-2SLS results show that firms with larger foreign investments tend to have poorer firm performance than firms with smaller foreign investments at both short and long horizons. The results further show that foreign investments are negatively associated with revenue growth and cost efficiency. We find no evidence that cost efficiency mediates the effect of foreign investments on firm performance; however, our findings provide some evidence that revenue growth partially mediates the relationship between foreign investments and firm performance.
AB - We study the implications of foreign investments for firm performance. Using a panel sample of publicly listed non-financial firms in 17 countries in Asia Pacific from 1990 to 2016, we examine whether firms with larger foreign investments perform better than those with smaller foreign investments and whether cost efficiency and revenue growth mediate the effect of foreign investments on firm performance. The IV-2SLS results show that firms with larger foreign investments tend to have poorer firm performance than firms with smaller foreign investments at both short and long horizons. The results further show that foreign investments are negatively associated with revenue growth and cost efficiency. We find no evidence that cost efficiency mediates the effect of foreign investments on firm performance; however, our findings provide some evidence that revenue growth partially mediates the relationship between foreign investments and firm performance.
KW - Asia Pacific
KW - Cost efficiency
KW - Firm performance
KW - Firm value
KW - Foreign investments
KW - Revenue growth
KW - Strategy
UR - http://www.scopus.com/inward/record.url?scp=85114055511&partnerID=8YFLogxK
U2 - 10.1016/j.iref.2021.04.011
DO - 10.1016/j.iref.2021.04.011
M3 - Article
AN - SCOPUS:85114055511
SN - 1059-0560
VL - 75
SP - 366
EP - 385
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
ER -