Institutions and equity structure of foreign affiliates

Question/Issue: We combine agency and institutional theory to explain the division of equity shares between the foreign (majority) and local (minority) partners within foreign affiliates. We posit that once the decision to invest is made, the ownership structure is arranged so as to generate appropriate incentives to local partners, taking into account both the institutional environment and the firm-specific difficulty in monitoring. Research Findings/Insights: Using a large firm-level dataset for the period 2003-2011 from 16 Central and Eastern European countries and applying selectivity corrected estimates, we find that both weaker host country institutions and higher share of intangible assets in total assets in the firm imply higher minority equity share of local partners. The findings hold when controlling for host country effects and when the attributes of the institutional environment are instrumented. Theoretical/Academic Implications: The classic view is that weak institutions lead to concentrated ownership, yet it leaves the level of minority equity shares unexplained. Our contribution uses a firm-level perspective combined with national-level variation in the institutional environment, and applies agency theory to explain the minority local partner share in foreign affiliates. In particular, we posit that the information asymmetry and monitoring problem in firms are exacerbated by weak host country institutions, but also by the higher share of intangible assets in total assets. Practitioner/Policy Implications: Assessing investment opportunities abroad, foreign firms need to pay attention not only to features directly related to corporate governance (e.g., bankruptcy codes) but also to the broad institutional environment. In weak institutional environments, foreign parent firms need to create strong incentives for local partners by offering them significant minority shares in equity. The same recommendation applies to firms with higher shares of intangible assets in total assets

Chinese multinationals: host country factors and foreign direct investment location

The study of Chinese multinationals (MNEs) is becoming one of the most promising research topics in the international business literature. After outlining the distinctive characteristics of the internationalization process of Chinese MNEs, this chapter analyzes the influence of various host country factors on the location of Chinese outward foreign direct investment (FDI). From a sample of 189 outward FDI decisions made by 35 mainland Chinese firms in 63 countries, our results show that host market size and the existence of overseas Chinese in the host country are positively associated with the number of Chinese FDIs. However, greater difficulty in doing business and host country political risk have no effect

Small suppression of the complete fusion of the Li-6+Zr-96 system at near-barrier energies

The measurements of complete fusion cross sections for 6Li+96Zr have been performed at energies around the Coulomb barrier by the online γ-ray method. The complete fusion cross sections at above-barrier energies were found to be suppressed by ∼25%. A comparison of the systematics of complete fusion suppression with the existing data for 6Li+ heavy targets with the present results shows that the systematics of the suppression factor observed for 6Li-induced fusion in the heavy mass region may not be consistent in lighter target mass region.status: publishe

Coupling effects on the fusion of Li-6+Sm-154 at energies slightly above the Coulomb barrier

Measurements of complete and incomplete fusion cross sections for 6Li+154Sm have been performed at energies above the Coulomb barrier by the online γ-ray method, to investigate the effect of breakup and inelastic couplings on the complete fusion (CF) of this weakly bound system. We show that inelastic excitation couplings have non-negligible effects, when compared with the breakup effect, for deformed nuclei at energies very close to the Coulomb barrier. The average CF suppression corresponding to dynamic breakup effects was found to be around 35%. The total fusion cross section is not affected by the breakup coupling. A comparison between the 6Li-induced CF suppression for three different samarium isotopes shows that the breakup effect is larger for the more spherical isotope.status: publishe