Capital Market Liability of Foreignness and Country-of-Origin Stereotype: An empirical investigation
Published In
Transnational Corporations Review
Document Type
Article
Publication Date
4-2024
Subjects
Capital markets
Abstract
Foreign firms face a liability of foreignness (LOF) in capital markets outside their home countries. Focusing on discrimination hazards as an antecedent to capital market liability of foreignness (CMLOF), we extend the concept of country-of-origin stereotypes to capture discrimination hazards in capital markets. We employ data from foreign firms listed on the three major stock exchanges in the United States from 2002 to 2016 to demonstrate that, compared with domestic US firms, foreign firms are discounted on major stock exchanges in the US and that foreign firms from countries stereotyped as high-warmth and high-competence are not discounted. Our results reveal that discrimination hazards do impact CMLOFs, suggesting that firms venturing into foreign capital markets should invest in perceptions of warmth to mitigate CMLOFs.
Rights
© 2023 The Author(s). Published by Elsevier B.V. on behalf of Zhejiang University.
Locate the Document
DOI
10.1016/j.tncr.2023.07.002
Persistent Identifier
https://archives.pdx.edu/ds/psu/41740
Citation Details
Ige, Abiodun, and Marvin Washington. "Capital market liability of foreignness and country-of-origin stereotype: An empirical investigation." Transnational Corporations Review 15.4 (2023): 50-58.