Abstract
Principal-agent problems between corporate parent and subsidiary operations are frequently exacerbated in international settings by exchange rate fluctuations between the foreign subsidiary's local currency and the parent multinational corporation's reference currency. We develop a conceptual solution to this international control conundrum using Economic Value Added as the sole performance numéraire. Our framework facilitates assessment of foreign subsidiary performance in emerging-market countries in the presence of unexpected, exchange-related shocks.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Author information
Authors and Affiliations
Additional information
*Laurent L. Jacque is Professor of International Finance and Banking at the Fletcher School, Tufts University and the HEC School of Management, France.
**Paul M. Vaaler is Assistant Professor of International Business at the Fletcher School, Tufts University. His research focuses on multinational enterprise strategy and behavior.
Rights and permissions
About this article
Cite this article
Jacque, L., Vaaler, P. The International Control Conundrum with Exchange Risk: An EVA Framework. J Int Bus Stud 32, 813–832 (2001). https://doi.org/10.1057/palgrave.jibs.8490996
Published:
Issue Date:
DOI: https://doi.org/10.1057/palgrave.jibs.8490996