Japanese MNEs and host countries’ legal institutions
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- Landi, J. Asian Bus Manage (2011) 10: 87. doi:10.1057/abm.2010.35
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I examine influences of legal systems exposures and legality distance arising from host-country networks on MNEs’ q ratios. For Japanese MNEs (FY1995–2002), common law and socialist law exposures are generally insignificant. However, common law exposure lowers value for horizontal keiretsu members, likely reflecting their preference for less transparent operating environments that conflict with advanced-country common law regimes. Legality distance negatively impacts firm value, especially for keiretsu members. However, legality distance arising from advanced host countries actually boosts value for horizontal keiretsu members, as such countries generally provide better business environments compared to the home country, Japan. Moreover, main bank ownership moderates the negative value impact of legality distance by facilitating MNEs’ adaptation to differing host-country legal regimes.