Multinational country risk: Exposure to asset holding risk and operating risk in international business

Document Type

Article

Publication Date

11-1-2019

Abstract

We address the phenomenon of country total risk, confounded by the risk of holding assets abroad and operating them in the foreign market. The findings point to deep differences in risk patterns as ownership of intangible assets exposes the holders to a higher risk. Indeed, the asset-specific risk is the dominant component of advance market volatility, explaining more than 80 percent of the cross-sectional variance. The model in the study accounts for the deficiencies in the related research streams and attempt to alleviate the typical problems in popular estimation methods.

DOI

https://doi.org/10.1016/j.jwb.2019.101041

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