Overseas Expansion And Shareholders Wealth

Abstract

The effects of overseas expansion on shareholders wealth were studied in this paper. The results for a sample of 179 announcements of overseas expansion showed positive and significant cumulative average residuals (CARs). The results for initial overseas expansion were more positive than for subsequent overseas expansion. Five different methods of expansion were examined. Announcements of exports results in the highest, positive and significant CARs. CARs for licensing, opening an overseas subsidiary and acquiring a growing concern were marginally significant, while CARs associated with joint venture announcements were positive but insignificant. The results did not indicate that any differences were associated with the degree of industrialization of the host country.